DSCR refinance question for 8-unit lease-up deal
Jasmin SaavedraPro Member
Member since 2023 · 8 posts · 4 votesDSCR refinance question for 8-unit lease-up deal
Most Popular Reply
Stacy RaskinBusiness Member
Lender · Member since 2022 · 1k+ posts · 494 votesDepends on the amount of units that are at the property as DSCR mortgage brokers and lenders often have different loan programs depending on how many units are part of the property. There are 1-4 unit DSCR programs that are more lenient on vacancies compared to 5-8 unit programs that generally have stricter guidelines on vacancies where some DSCR programs may only allow one or less vacancy for a 5-8 unit program.
The units also have to be in rent ready condition so when the appraiser goes out there he will mark the condition as "as is" versus "subject to" getting repairs done or rehab completed in order to close the loan. If the appraiser marks the appraisal as "subject to," the appraiser will have to go out again to make sure the repairs are done and do a report addendum. So the rehab has to be done if you are trying to get a DSCR loan.
It can be helpful to work with a mortgage broker who specializes in DSCR loans as experienced ones have relationships with wholesale lenders who specialize in DSCR loans which can help an investor find programs with LTV, rates and program guidelines that are more favorable to the investor.
Generally a 5-8 unit DSCR loan will be a more detailed underwrite compared to a 1-4 unit DSCR loan. Happy to connect to discuss further.
Bright Skyline518 Reviews
10 Replies
- Lender · Atlanta · Member since 2026 · 7 posts · 2 votes6mo
A property is considered stabilized when it is:
- Fully rentable (no major rehab needed)
- Leased or capable of being leased at market rents
- Producing consistent income
1.
Lease in Place (or Rent-Ready)
- Most lenders want a signed lease
- Some allow market rent (no lease) via appraisal (Form 1007 / rent schedule)
Best case: Tenant in place paying rent
2.
Seasoning Period (Ownership Time)
This is where lenders differ:
- 0–30 days (No seasoning lenders)
- Allowed if property is rent-ready and appraised higher
- Usually based on as-is or market value
- 3 months (90 days)
- Very common minimum
- Especially if you did light rehab
- 6 months (Most common “safe zone”)
- Considered fully stabilized by most lenders
- Allows use of after-repair value (ARV)
- Lender · Marlboro, NJ · Member since 2025 · 239 posts · 146 votes6mo
In general, lenders want to see all units leased, a clean rent roll reflecting in-place rents, and ideally 1–3 months of collections at or near those levels. That’s when you’ll typically get full credit for the stabilized income.
Some lenders will consider market rents or near-term lease-up, but they’ll usually underwrite more conservatively, whether that’s higher vacancy, lower income, or reduced leverage. So you can refinance earlier, but you’re often leaving proceeds on the table.
It really comes down to your goal: If you want maximum cash-out, wait until fully stabilized with a short operating history. If you want to pull capital sooner, you can likely do it now, just expect a more conservative execution.
- 6moStacy RaskinBusiness MemberLender · Member since 2022 · 1k+ posts · 494 votes
Depends on the amount of units that are at the property as DSCR mortgage brokers and lenders often have different loan programs depending on how many units are part of the property. There are 1-4 unit DSCR programs that are more lenient on vacancies compared to 5-8 unit programs that generally have stricter guidelines on vacancies where some DSCR programs may only allow one or less vacancy for a 5-8 unit program.
The units also have to be in rent ready condition so when the appraiser goes out there he will mark the condition as "as is" versus "subject to" getting repairs done or rehab completed in order to close the loan. If the appraiser marks the appraisal as "subject to," the appraiser will have to go out again to make sure the repairs are done and do a report addendum. So the rehab has to be done if you are trying to get a DSCR loan.
It can be helpful to work with a mortgage broker who specializes in DSCR loans as experienced ones have relationships with wholesale lenders who specialize in DSCR loans which can help an investor find programs with LTV, rates and program guidelines that are more favorable to the investor.
Generally a 5-8 unit DSCR loan will be a more detailed underwrite compared to a 1-4 unit DSCR loan. Happy to connect to discuss further.
Bright Skyline518 Reviews - 6moDevin PetersonBusiness MemberLender · Sarasota, FL · Member since 2022 · 2k+ posts · 664 votes
Quote from @Jasmin Saavedra:
Hi everyone,
I'm working on an 8-unit value-add property and had a question about DSCR refinance timing.
Current status:
- 6 units fully renovated
- 5 units currently leased
- 6th unit about to be leased (~$1,200)
- Remaining 2 units still in rehab
Stabilized rents should be around ~$7,800/month.
My question is:
At what point would most DSCR lenders consider a property like this "stabilized" enough to refinance?Would lenders typically:
- Require all units to be leased first, or
- Consider market rents / near-term lease-up?
Also curious if anyone has successfully refinanced in a similar lease-up stage.
Appreciate any insight or experience — thank you!
Great questions, Jasmine! Also, so exciting to see what an interesting project you have going on. In simplest terms, lenders are gonna want to see at least 75% of all units occupied and stabilized. This should be enough to cover the debt ratio. if it is not, you can try to entertain interest only or a 40 year amortization schedule. These options will help lower your monthly payment and increase the debt service ratio. There are a lot of ways to get this done! Good luck!
ProAlpha Capital56 Reviews - Flipper/Rehabber · Kansas City, MO · Member since 2026 · 11 posts · 7 votes6mo
Nobody mentioned the appraisal piece yet and it's probably the most immediate issue you have. With 2 units still in rehab, the appraiser is going to mark those as 'subject to' completion -- meaning the lender can't close until the work is done and re-inspected. I ran into something similar on a refi I did in Independence, thought I could start the process while finishing up one unit and the appraiser basically froze it. So finish the rehab first, full stop.
Once all 8 units are done and you've got a rent roll showing at least 5-6 of them occupied, most DSCR shops will talk to you. The 90-day seasoning window is common but it's actually more flexible than people think -- I've seen lenders work with 60 days if you have leases in place. The 6-month thing is when they stop asking questions at all.
The other thing: 8-unit puts you in a different lending box. I've referred buyers to DSCR shops that do great work on 1-4 unit and they couldn't touch an 8. Call 3-4 lenders before you think you know where the ceiling is. The small multifamily programs (5-8 unit) have stricter occupancy requirements and tighter guidelines than the standard DSCR stuff most people know.
- Investor · Tampa, FL · Member since 2026 · 24 posts · 18 votes5mo
Done three DSCR refis on SFH, not multifamily yet, but I'm shopping 5-8 unit programs right now so I've been having this exact conversation with lenders.
From the borrower side - don't rush it. Every one of my refis, the lender underwrote based on the lower of in-place rents or market rents from the appraisal. Not proformas, not what you think you'll get. Actual signed leases. One of my deals the appraisal came in below what the seller had been projecting for rents and it changed everything.
8-unit also puts you in a different lending box than 1-4. The lenders I've talked to for my next deal have stricter occupancy requirements on 5-8 unit programs, some won't even look at you with more than one vacancy. So getting all 8 leased before you start the process isn't just nice to have, it might be a hard requirement depending on the lender.
Finish the rehab, get the last three units leased, collect at least 60-90 days of rent, and go in with a clean roll. Couple extra months of carrying costs beats leaving cash-out on the table because you pulled the trigger too early.
- Investor · Houston, TX · Member since 2019 · 95 posts · 29 votes5mo
Great thread Jasmin. Everyone covered the DSCR side really well so I'll add a different angle from the investor side.
One thing I've seen work for deals like this — where you're in that awkward gap between rehab and stabilization — is having liquid capital available that doesn't require a bank. I've funded flips using cash value from a whole life policy. No application, no credit check, no waiting. The money was just there when I needed it.
For your 8-unit specifically, that lease-up period where you're carrying costs on the last 2-3 units is where most investors feel the squeeze. Having a capital reserve you can tap instantly — and that keeps growing even while you borrow against it — gives you breathing room to wait for the right refi terms instead of rushing into a deal that leaves money on the table.
Not saying it replaces the DSCR refi. But it can be the bridge that lets you wait for the 90-day seasoning with a full rent roll instead of settling for conservative underwriting at 6 units occupied.
Done 100+ flips in Houston and this strategy changed how I think about carrying costs. Good luck with the project — sounds like a solid deal.
- 5moJake YuskaitisBusiness MemberLender · New Jersey, USA · Member since 2022 · 254 posts · 67 votes
golden standard for stabilized
no deferred maintenance
all units livable and rented with long term leases
1.25 DSCR
Frontier Funding LLC533 Reviews
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