Refinance Strategy for Rental Property - Conventional Bank vs. DSCR

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Refinance Strategy for Rental Property - Conventional Bank vs. DSCR

Investor · USA · Member since 2024 · 156 posts · 50 votes

Hi BiggerPockets Community,

I'm looking for some advice on refinancing a rental property through a conventional bank and would love to tap into the collective experience here.

We currently own a single-family rental in Decatur, IL, which is occupied by a Section 8 tenant with a stable rent of $1,200/month. While we've used DSCR loans in the past for their simplicity, the underwriting can be a lengthy process, and we're exploring if a more traditional route with a conventional bank might be a better fit for this property.

Our Goal:
We want to pull equity out of this property via a cash-out refinance to fund a new acquisition. Ideally, we'd like to do this through a conventional bank, using the property's rental income to qualify.

Our Main Questions:

Is it possible for a conventional bank to approve a loan primarily based on the property's rental income, rather than our personal W-2 income? We operate through our LLC, C&T Global Solutions LLC.
What specific documentation would a "normal" bank require? I assume we'd need:
- A solid lease agreement.
- Proof of rental income (bank statements showing deposits).
- What about tax returns? Would they need to see Schedule E from our personal returns, or would they consider the LLC's financials?
How do banks typically treat the income? Do they use 75% of the gross rent? Is there a minimum debt-service coverage ratio (DSCR) they look for, even on a single-family rental?
Does the fact that it's a Section 8 tenant with guaranteed income help or hinder the application in the eyes of a conventional underwriter?

Property Snapshot:

Type: Single-Family Home
Location: Decatur, IL
Status: Rented
Rent: $1,200/month (Section 8)

If anyone has successfully navigated a similar refinance with a local or national bank, I would be incredibly grateful for any insights. What was your experience? Which banks are known to be more rental-property-friendly for investors?

Thanks in advance for sharing your knowledge!

Eduardo Cambil

1 Reply

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Erik EstradaBusiness Member

Lender · Member since 2022 · 6k+ posts · 1k+ votes

11mo

Quote from @Eduardo Cambil:

Hi BiggerPockets Community,

I'm looking for some advice on refinancing a rental property through a conventional bank and would love to tap into the collective experience here.

Our Main Questions:

Is it possible for a conventional bank to approve a loan primarily based on the property's rental income, rather than our personal W-2 income? We operate through our LLC, C&T Global Solutions LLC.
What specific documentation would a "normal" bank require? I assume we'd need:
- A solid lease agreement.
- Proof of rental income (bank statements showing deposits).
- What about tax returns? Would they need to see Schedule E from our personal returns, or would they consider the LLC's financials?
How do banks typically treat the income? Do they use 75% of the gross rent? Is there a minimum debt-service coverage ratio (DSCR) they look for, even on a single-family rental?
Does the fact that it's a Section 8 tenant with guaranteed income help or hinder the application in the eyes of a conventional underwriter?

Property Snapshot:

Type: Single-Family Home
Location: Decatur, IL
Status: Rented
Rent: $1,200/month (Section 8)

Thanks in advance for sharing your knowledge!

Eduardo Cambil

Hey Eduardo,

DSCR loans are actually the easiest underwriting process compared to a conventional mortgage. It might be that your lender is not experienced in navigating the conditions. The rates are also very similar to a conventional mortgage.

A conventional lender will want to verify your income for the past 2 years. If you are W-2 earner you will need to provide your 2023, 2024 W2s. If you are self employed, you will need to provide your last 2 years of business and personal tax returns. If you own multiple rentals, lenders will want to see your schedule Es for the last 2 years as well. It is actually a harder process to qualify conventionally if you are a full-time RE investor, as many investors have several mortgages, do a lot of tax write offs. It is not impossible, but there will be a lot more underwriting scrutiny when it comes to proving income as compared to a DSCR loan.

[email protected]818-269-7983

LuxePrivate Investments LLC 570 Reviews

Website View Page

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Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
11mo
Quote from @Eduardo Cambil:
Hi BiggerPockets Community,

I'm looking for some advice on refinancing a rental property through a conventional bank and would love to tap into the collective experience here.

We currently own a single-family rental in Decatur, IL, which is occupied by a Section 8 tenant with a stable rent of $1,200/month. While we've used DSCR loans in the past for their simplicity, the underwriting can be a lengthy process, and we're exploring if a more traditional route with a conventional bank might be a better fit for this property.

Our Goal:
We want to pull equity out of this property via a cash-out refinance to fund a new acquisition. Ideally, we'd like to do this through a conventional bank, using the property's rental income to qualify.

Our Main Questions:

Is it possible for a conventional bank to approve a loan primarily based on the property's rental income, rather than our personal W-2 income? We operate through our LLC, C&T Global Solutions LLC.
What specific documentation would a "normal" bank require? I assume we'd need:
A solid lease agreement.
Proof of rental income (bank statements showing deposits).
What about tax returns? Would they need to see Schedule E from our personal returns, or would they consider the LLC's financials?
How do banks typically treat the income? Do they use 75% of the gross rent? Is there a minimum debt-service coverage ratio (DSCR) they look for, even on a single-family rental?
Does the fact that it's a Section 8 tenant with guaranteed income help or hinder the application in the eyes of a conventional underwriter?

Property Snapshot:

Type: Single-Family Home
Location: Decatur, IL
Status: Rented
Rent: $1,200/month (Section 8)

If anyone has successfully navigated a similar refinance with a local or national bank, I would be incredibly grateful for any insights. What was your experience? Which banks are known to be more rental-property-friendly for investors?

Thanks in advance for sharing your knowledge!

Eduardo Cambil
Hey Eduardo,
DSCR loans are actually the easiest underwriting process compared to a conventional mortgage. It might be that your lender is not experienced in navigating the conditions. The rates are also very similar to a conventional mortgage.
A conventional lender will want to verify your income for the past 2 years. If you are W-2 earner you will need to provide your 2023, 2024 W2s. If you are self employed, you will need to provide your last 2 years of business and personal tax returns. If you own multiple rentals, lenders will want to see your schedule Es for the last 2 years as well. It is actually a harder process to qualify conventionally if you are a full-time RE investor, as many investors have several mortgages, do a lot of tax write offs. It is not impossible, but there will be a lot more underwriting scrutiny when it comes to proving income as compared to a DSCR loan.
[email protected]818-269-7983
LuxePrivate Investments LLC 570 Reviews
Website View Page
1 Reply
- Eduardo Cambil
  OP
  Investor · USA · Member since 2024 · 156 posts · 50 votes
  11mo
  Quote from @Erik Estrada:
  
  Quote from @Eduardo Cambil:
  
  Hi BiggerPockets Community,
  
  I'm looking for some advice on refinancing a rental property through a conventional bank and would love to tap into the collective experience here.
  
  We currently own a single-family rental in Decatur, IL, which is occupied by a Section 8 tenant with a stable rent of $1,200/month. While we've used DSCR loans in the past for their simplicity, the underwriting can be a lengthy process, and we're exploring if a more traditional route with a conventional bank might be a better fit for this property.
  
  Our Goal:
  We want to pull equity out of this property via a cash-out refinance to fund a new acquisition. Ideally, we'd like to do this through a conventional bank, using the property's rental income to qualify.
  
  Our Main Questions:
  
  Is it possible for a conventional bank to approve a loan primarily based on the property's rental income, rather than our personal W-2 income? We operate through our LLC, C&T Global Solutions LLC.
  What specific documentation would a "normal" bank require? I assume we'd need:
  A solid lease agreement.
  Proof of rental income (bank statements showing deposits).
  What about tax returns? Would they need to see Schedule E from our personal returns, or would they consider the LLC's financials?
  How do banks typically treat the income? Do they use 75% of the gross rent? Is there a minimum debt-service coverage ratio (DSCR) they look for, even on a single-family rental?
  Does the fact that it's a Section 8 tenant with guaranteed income help or hinder the application in the eyes of a conventional underwriter?
  
  Property Snapshot:
  
  Type: Single-Family Home
  Location: Decatur, IL
  Status: Rented
  Rent: $1,200/month (Section 8)
  
  If anyone has successfully navigated a similar refinance with a local or national bank, I would be incredibly grateful for any insights. What was your experience? Which banks are known to be more rental-property-friendly for investors?
  
  Thanks in advance for sharing your knowledge!
  
  Eduardo Cambil
  
  Hey Eduardo,
  DSCR loans are actually the easiest underwriting process compared to a conventional mortgage. It might be that your lender is not experienced in navigating the conditions. The rates are also very similar to a conventional mortgage.
  A conventional lender will want to verify your income for the past 2 years. If you are W-2 earner you will need to provide your 2023, 2024 W2s. If you are self employed, you will need to provide your last 2 years of business and personal tax returns. If you own multiple rentals, lenders will want to see your schedule Es for the last 2 years as well. It is actually a harder process to qualify conventionally if you are a full-time RE investor, as many investors have several mortgages, do a lot of tax write offs. It is not impossible, but there will be a lot more underwriting scrutiny when it comes to proving income as compared to a DSCR loan.
  Hi Erik,
  
  Thanks so much for laying that out — really appreciate the clarity. I completely agree with you that DSCR underwriting is much easier than conventional, especially for full-time real estate investors without W-2 income. That part definitely makes sense.
  
  The challenge I’m running into isn’t the underwriting — it’s the cost structure on small loan amounts.
  
  For example, I’m looking to refinance a $56K rental under seller financing, and DSCR lenders are quoting $7K–$8K in origination + closing costs. The property itself only cost $6K to close originally, so the economics just don’t make sense.
  
  So my real question is:
  
  Do you know any DSCR lenders with lower fees or reduced closing costs for sub-$100K refinances?
  
  Even a recommendation or direction would help a lot, because the underwriting is great — it's just the fee structure that's making small-balance DSCR refinances nearly impossible.
  
  Thanks again for your insight, Erik — really appreciate your help.
  
  Best,
  
  Eduardo
  0 Reply
- Erik EstradaBusiness Member
  Lender · Member since 2022 · 6k+ posts · 1k+ votes
  11mo
  Quote from @Eduardo Cambil:
  
  Quote from @Erik Estrada:
  
  Quote from @Eduardo Cambil:
  
  Hi BiggerPockets Community,
  
  I'm looking for some advice on refinancing a rental property through a conventional bank and would love to tap into the collective experience here.
  
  We currently own a single-family rental in Decatur, IL, which is occupied by a Section 8 tenant with a stable rent of $1,200/month. While we've used DSCR loans in the past for their simplicity, the underwriting can be a lengthy process, and we're exploring if a more traditional route with a conventional bank might be a better fit for this property.
  
  Our Goal:
  We want to pull equity out of this property via a cash-out refinance to fund a new acquisition. Ideally, we'd like to do this through a conventional bank, using the property's rental income to qualify.
  
  Our Main Questions:
  
  Is it possible for a conventional bank to approve a loan primarily based on the property's rental income, rather than our personal W-2 income? We operate through our LLC, C&T Global Solutions LLC.
  What specific documentation would a "normal" bank require? I assume we'd need:
  A solid lease agreement.
  Proof of rental income (bank statements showing deposits).
  What about tax returns? Would they need to see Schedule E from our personal returns, or would they consider the LLC's financials?
  How do banks typically treat the income? Do they use 75% of the gross rent? Is there a minimum debt-service coverage ratio (DSCR) they look for, even on a single-family rental?
  Does the fact that it's a Section 8 tenant with guaranteed income help or hinder the application in the eyes of a conventional underwriter?
  
  Property Snapshot:
  
  Type: Single-Family Home
  Location: Decatur, IL
  Status: Rented
  Rent: $1,200/month (Section 8)
  
  If anyone has successfully navigated a similar refinance with a local or national bank, I would be incredibly grateful for any insights. What was your experience? Which banks are known to be more rental-property-friendly for investors?
  
  Thanks in advance for sharing your knowledge!
  
  Eduardo Cambil
  
  Hey Eduardo,
  DSCR loans are actually the easiest underwriting process compared to a conventional mortgage. It might be that your lender is not experienced in navigating the conditions. The rates are also very similar to a conventional mortgage.
  A conventional lender will want to verify your income for the past 2 years. If you are W-2 earner you will need to provide your 2023, 2024 W2s. If you are self employed, you will need to provide your last 2 years of business and personal tax returns. If you own multiple rentals, lenders will want to see your schedule Es for the last 2 years as well. It is actually a harder process to qualify conventionally if you are a full-time RE investor, as many investors have several mortgages, do a lot of tax write offs. It is not impossible, but there will be a lot more underwriting scrutiny when it comes to proving income as compared to a DSCR loan.
  Hi Erik,
  
  Thanks so much for laying that out — really appreciate the clarity. I completely agree with you that DSCR underwriting is much easier than conventional, especially for full-time real estate investors without W-2 income. That part definitely makes sense.
  
  The challenge I’m running into isn’t the underwriting — it’s the cost structure on small loan amounts.
  
  For example, I’m looking to refinance a $56K rental under seller financing, and DSCR lenders are quoting $7K–$8K in origination + closing costs. The property itself only cost $6K to close originally, so the economics just don’t make sense.
  
  So my real question is:
  
  Do you know any DSCR lenders with lower fees or reduced closing costs for sub-$100K refinances?
  
  Even a recommendation or direction would help a lot, because the underwriting is great — it's just the fee structure that's making small-balance DSCR refinances nearly impossible.
  
  Thanks again for your insight, Erik — really appreciate your help.
  
  Best,
  
  Eduardo
  
  I think this will be the main challenge with sub $100k properties. They are just not profitable for DSCR lenders to originate for only 1 or 2 points, unless it is a portfolio.
  
  Most brokers/lenders make their money on the front end through fees or rate premiums. They then sell the note off to a secondary note buyer. Some direct lenders make money on the back end when they sell it, however these micro loans have a very small buyer pool. Less demand for these notes = higher rates.
  
  Your best bet is buying these cash or with a HELOC if you are trying to minimize fees and paperwork. Otherwise, I don't think there will be very many lenders that will compete for this size of a deal.
  [email protected]818-269-7983
  LuxePrivate Investments LLC 570 Reviews
  Website View Page
  0 Reply
- Andrew Zamboroski
  Lender · Member since 2021 · 500 posts · 131 votes
  11mo
  Quote from @Erik Estrada:
  
  Quote from @Eduardo Cambil:
  
  Quote from @Erik Estrada:
  
  Quote from @Eduardo Cambil:
  
  Hi BiggerPockets Community,
  
  I'm looking for some advice on refinancing a rental property through a conventional bank and would love to tap into the collective experience here.
  
  We currently own a single-family rental in Decatur, IL, which is occupied by a Section 8 tenant with a stable rent of $1,200/month. While we've used DSCR loans in the past for their simplicity, the underwriting can be a lengthy process, and we're exploring if a more traditional route with a conventional bank might be a better fit for this property.
  
  Our Goal:
  We want to pull equity out of this property via a cash-out refinance to fund a new acquisition. Ideally, we'd like to do this through a conventional bank, using the property's rental income to qualify.
  
  Our Main Questions:
  
  Is it possible for a conventional bank to approve a loan primarily based on the property's rental income, rather than our personal W-2 income? We operate through our LLC, C&T Global Solutions LLC.
  What specific documentation would a "normal" bank require? I assume we'd need:
  A solid lease agreement.
  Proof of rental income (bank statements showing deposits).
  What about tax returns? Would they need to see Schedule E from our personal returns, or would they consider the LLC's financials?
  How do banks typically treat the income? Do they use 75% of the gross rent? Is there a minimum debt-service coverage ratio (DSCR) they look for, even on a single-family rental?
  Does the fact that it's a Section 8 tenant with guaranteed income help or hinder the application in the eyes of a conventional underwriter?
  
  Property Snapshot:
  
  Type: Single-Family Home
  Location: Decatur, IL
  Status: Rented
  Rent: $1,200/month (Section 8)
  
  If anyone has successfully navigated a similar refinance with a local or national bank, I would be incredibly grateful for any insights. What was your experience? Which banks are known to be more rental-property-friendly for investors?
  
  Thanks in advance for sharing your knowledge!
  
  Eduardo Cambil
  
  Hey Eduardo,
  DSCR loans are actually the easiest underwriting process compared to a conventional mortgage. It might be that your lender is not experienced in navigating the conditions. The rates are also very similar to a conventional mortgage.
  A conventional lender will want to verify your income for the past 2 years. If you are W-2 earner you will need to provide your 2023, 2024 W2s. If you are self employed, you will need to provide your last 2 years of business and personal tax returns. If you own multiple rentals, lenders will want to see your schedule Es for the last 2 years as well. It is actually a harder process to qualify conventionally if you are a full-time RE investor, as many investors have several mortgages, do a lot of tax write offs. It is not impossible, but there will be a lot more underwriting scrutiny when it comes to proving income as compared to a DSCR loan.
  Hi Erik,
  
  Thanks so much for laying that out — really appreciate the clarity. I completely agree with you that DSCR underwriting is much easier than conventional, especially for full-time real estate investors without W-2 income. That part definitely makes sense.
  
  The challenge I’m running into isn’t the underwriting — it’s the cost structure on small loan amounts.
  
  For example, I’m looking to refinance a $56K rental under seller financing, and DSCR lenders are quoting $7K–$8K in origination + closing costs. The property itself only cost $6K to close originally, so the economics just don’t make sense.
  
  So my real question is:
  
  Do you know any DSCR lenders with lower fees or reduced closing costs for sub-$100K refinances?
  
  Even a recommendation or direction would help a lot, because the underwriting is great — it's just the fee structure that's making small-balance DSCR refinances nearly impossible.
  
  Thanks again for your insight, Erik — really appreciate your help.
  
  Best,
  
  Eduardo
  
  I think this will be the main challenge with sub $100k properties. They are just not profitable for DSCR lenders to originate for only 1 or 2 points, unless it is a portfolio.
  
  Most brokers/lenders make their money on the front end through fees or rate premiums. They then sell the note off to a secondary note buyer. Some direct lenders make money on the back end when they sell it, however these micro loans have a very small buyer pool. Less demand for these notes = higher rates.
  
  Your best bet is buying these cash or with a HELOC if you are trying to minimize fees and paperwork. Otherwise, I don't think there will be very many lenders that will compete for this size of a deal.
  Erik does a great job breaking this down. While I consider our fees on smaller loans to be less than average, they are still a higher percentage. Many costs are fixed to a project (processing fee for instance, minimum origination) and are similar on a 50K loan compared to a 150K loan.
  0 Reply
J CastroBusiness Member
Lender · Florida · Member since 2025 · 765 posts · 267 votes
11mo
Quote from @Eduardo Cambil:
Hi BiggerPockets Community,

I'm looking for some advice on refinancing a rental property through a conventional bank and would love to tap into the collective experience here.

We currently own a single-family rental in Decatur, IL, which is occupied by a Section 8 tenant with a stable rent of $1,200/month. While we've used DSCR loans in the past for their simplicity, the underwriting can be a lengthy process, and we're exploring if a more traditional route with a conventional bank might be a better fit for this property.

Our Goal:
We want to pull equity out of this property via a cash-out refinance to fund a new acquisition. Ideally, we'd like to do this through a conventional bank, using the property's rental income to qualify.

Our Main Questions:

Is it possible for a conventional bank to approve a loan primarily based on the property's rental income, rather than our personal W-2 income? We operate through our LLC, C&T Global Solutions LLC.
What specific documentation would a "normal" bank require? I assume we'd need:
A solid lease agreement.
Proof of rental income (bank statements showing deposits).
What about tax returns? Would they need to see Schedule E from our personal returns, or would they consider the LLC's financials?
How do banks typically treat the income? Do they use 75% of the gross rent? Is there a minimum debt-service coverage ratio (DSCR) they look for, even on a single-family rental?
Does the fact that it's a Section 8 tenant with guaranteed income help or hinder the application in the eyes of a conventional underwriter?

Property Snapshot:

Type: Single-Family Home
Location: Decatur, IL
Status: Rented
Rent: $1,200/month (Section 8)

If anyone has successfully navigated a similar refinance with a local or national bank, I would be incredibly grateful for any insights. What was your experience? Which banks are known to be more rental-property-friendly for investors?

Thanks in advance for sharing your knowledge!

Eduardo Cambil
Hey @Eduardo Cambil
When it comes to refinancing a rental, DSCR loans stand out for their streamlined underwriting. DSCR loans offer one of the easiest underwriting paths for refinancing a rental property—your deal is approved based on cash flow, not tax returns.

That means no W-2s, no pay stubs, no piles of income paperwork.
If the property’s rent covers the mortgage payment, you’re already halfway there.

For investors, this is a game-changer:
  • Fast approvals
  • Minimal documentation
  • Perfect for scaling your rental portfolio
  • Ideal if you’re self-employed or write off heavily
If you've been waiting for the right time to refi, a DSCR loan may be the most straightforward path to better terms, more cash flow, or pulling equity for your next deal up to 75% LTV.
If you have any questions on our current loan programs, please let me know as I'm happy to discuss them with you.
JCREIG Capital Funding
Website View Page
0 Reply
- Eduardo Cambil
  OP
  Investor · USA · Member since 2024 · 156 posts · 50 votes
  11mo
  Quote from @J Castro:
  
  Quote from @Eduardo Cambil:
  
  Hi BiggerPockets Community,
  
  I'm looking for some advice on refinancing a rental property through a conventional bank and would love to tap into the collective experience here.
  
  We currently own a single-family rental in Decatur, IL, which is occupied by a Section 8 tenant with a stable rent of $1,200/month. While we've used DSCR loans in the past for their simplicity, the underwriting can be a lengthy process, and we're exploring if a more traditional route with a conventional bank might be a better fit for this property.
  
  Our Goal:
  We want to pull equity out of this property via a cash-out refinance to fund a new acquisition. Ideally, we'd like to do this through a conventional bank, using the property's rental income to qualify.
  
  Our Main Questions:
  
  Is it possible for a conventional bank to approve a loan primarily based on the property's rental income, rather than our personal W-2 income? We operate through our LLC, C&T Global Solutions LLC.
  What specific documentation would a "normal" bank require? I assume we'd need:
  A solid lease agreement.
  Proof of rental income (bank statements showing deposits).
  What about tax returns? Would they need to see Schedule E from our personal returns, or would they consider the LLC's financials?
  How do banks typically treat the income? Do they use 75% of the gross rent? Is there a minimum debt-service coverage ratio (DSCR) they look for, even on a single-family rental?
  Does the fact that it's a Section 8 tenant with guaranteed income help or hinder the application in the eyes of a conventional underwriter?
  
  Property Snapshot:
  
  Type: Single-Family Home
  Location: Decatur, IL
  Status: Rented
  Rent: $1,200/month (Section 8)
  
  If anyone has successfully navigated a similar refinance with a local or national bank, I would be incredibly grateful for any insights. What was your experience? Which banks are known to be more rental-property-friendly for investors?
  
  Thanks in advance for sharing your knowledge!
  
  Eduardo Cambil
  
  Hey @Eduardo Cambil
  When it comes to refinancing a rental, DSCR loans stand out for their streamlined underwriting. DSCR loans offer one of the easiest underwriting paths for refinancing a rental property—your deal is approved based on cash flow, not tax returns.
  
  That means no W-2s, no pay stubs, no piles of income paperwork.
  If the property’s rent covers the mortgage payment, you’re already halfway there.
  
  For investors, this is a game-changer:
    • Fast approvals
    • Minimal documentation
    • Perfect for scaling your rental portfolio
    • Ideal if you’re self-employed or write off heavily
  If you've been waiting for the right time to refi, a DSCR loan may be the most straightforward path to better terms, more cash flow, or pulling equity for your next deal up to 75% LTV.
  If you have any questions on our current loan programs, please let me know as I'm happy to discuss them with you.
  Hi J,
  
  Thanks a lot for the breakdown — really appreciate the clarity on how DSCR underwriting works and why it's such a smooth process compared to conventional lending. Totally agree that for scaling a portfolio, the no-DTI approach is a huge advantage.
  
  My only challenge right now is that most DSCR lenders have high origination and closing fees, which makes smaller refinances almost impossible to justify.
  
  For example, I’m trying to refinance a $56K rental currently on seller financing.
  
  It only cost me around $6K to close originally, but DSCR quotes are coming back at $7–$8K in fees just to refinance — which completely breaks the numbers for a deal under $100K.
  
  Do you know of any lower-fee DSCR programs, regional banks, or alternative structures that are more friendly to small-balance refinances?
  
  Even a direction or recommendation would help a lot.
  
  Thanks again for taking the time to share your insights — really appreciate it.
  
  Best,
  
  Eduardo
  0 Reply
- J CastroBusiness Member
  Lender · Florida · Member since 2025 · 765 posts · 267 votes
  11mo
  Quote from @Eduardo Cambil:
  
  Quote from @J Castro:
  
  Quote from @Eduardo Cambil:
  
  Hi BiggerPockets Community,
  
  I'm looking for some advice on refinancing a rental property through a conventional bank and would love to tap into the collective experience here.
  
  We currently own a single-family rental in Decatur, IL, which is occupied by a Section 8 tenant with a stable rent of $1,200/month. While we've used DSCR loans in the past for their simplicity, the underwriting can be a lengthy process, and we're exploring if a more traditional route with a conventional bank might be a better fit for this property.
  
  Our Goal:
  We want to pull equity out of this property via a cash-out refinance to fund a new acquisition. Ideally, we'd like to do this through a conventional bank, using the property's rental income to qualify.
  
  Our Main Questions:
  
  Is it possible for a conventional bank to approve a loan primarily based on the property's rental income, rather than our personal W-2 income? We operate through our LLC, C&T Global Solutions LLC.
  What specific documentation would a "normal" bank require? I assume we'd need:
  A solid lease agreement.
  Proof of rental income (bank statements showing deposits).
  What about tax returns? Would they need to see Schedule E from our personal returns, or would they consider the LLC's financials?
  How do banks typically treat the income? Do they use 75% of the gross rent? Is there a minimum debt-service coverage ratio (DSCR) they look for, even on a single-family rental?
  Does the fact that it's a Section 8 tenant with guaranteed income help or hinder the application in the eyes of a conventional underwriter?
  
  Property Snapshot:
  
  Type: Single-Family Home
  Location: Decatur, IL
  Status: Rented
  Rent: $1,200/month (Section 8)
  
  If anyone has successfully navigated a similar refinance with a local or national bank, I would be incredibly grateful for any insights. What was your experience? Which banks are known to be more rental-property-friendly for investors?
  
  Thanks in advance for sharing your knowledge!
  
  Eduardo Cambil
  
  Hey @Eduardo Cambil
  When it comes to refinancing a rental, DSCR loans stand out for their streamlined underwriting. DSCR loans offer one of the easiest underwriting paths for refinancing a rental property—your deal is approved based on cash flow, not tax returns.
  
  That means no W-2s, no pay stubs, no piles of income paperwork.
  If the property’s rent covers the mortgage payment, you’re already halfway there.
  
  For investors, this is a game-changer:
    • Fast approvals
    • Minimal documentation
    • Perfect for scaling your rental portfolio
    • Ideal if you’re self-employed or write off heavily
  If you've been waiting for the right time to refi, a DSCR loan may be the most straightforward path to better terms, more cash flow, or pulling equity for your next deal up to 75% LTV.
  If you have any questions on our current loan programs, please let me know as I'm happy to discuss them with you.
  Hi J,
  
  Thanks a lot for the breakdown — really appreciate the clarity on how DSCR underwriting works and why it's such a smooth process compared to conventional lending. Totally agree that for scaling a portfolio, the no-DTI approach is a huge advantage.
  
  My only challenge right now is that most DSCR lenders have high origination and closing fees, which makes smaller refinances almost impossible to justify.
  
  For example, I’m trying to refinance a $56K rental currently on seller financing.
  
  It only cost me around $6K to close originally, but DSCR quotes are coming back at $7–$8K in fees just to refinance — which completely breaks the numbers for a deal under $100K.
  
  Do you know of any lower-fee DSCR programs, regional banks, or alternative structures that are more friendly to small-balance refinances?
  
  Even a direction or recommendation would help a lot.
  
  Thanks again for taking the time to share your insights — really appreciate it.
  
  Best,
  
  Eduardo
  
  You're very welcome,
  
  Hopefully, you can see the benefits of a DSCR loan.
  Yes - Unfortunately, due the loan amount (being under $100K) many lenders will charge a higher closing fees. Lenders must meet minimum yield expectations, if a loan is too small, the yield drops — unless fees are increased.
  
  Oddly, smaller loans sometimes show higher delinquency rates in private lending. which is another reason why many lenders also will adjusts pricing to offset that risk.
  JCREIG Capital Funding
  Website View Page
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Andrew Zamboroski
Lender · Member since 2021 · 500 posts · 131 votes
11mo
Quote from @Eduardo Cambil:
Hi BiggerPockets Community,

I'm looking for some advice on refinancing a rental property through a conventional bank and would love to tap into the collective experience here.

We currently own a single-family rental in Decatur, IL, which is occupied by a Section 8 tenant with a stable rent of $1,200/month. While we've used DSCR loans in the past for their simplicity, the underwriting can be a lengthy process, and we're exploring if a more traditional route with a conventional bank might be a better fit for this property.

Our Goal:
We want to pull equity out of this property via a cash-out refinance to fund a new acquisition. Ideally, we'd like to do this through a conventional bank, using the property's rental income to qualify.

Our Main Questions:

Is it possible for a conventional bank to approve a loan primarily based on the property's rental income, rather than our personal W-2 income? We operate through our LLC, C&T Global Solutions LLC.
What specific documentation would a "normal" bank require? I assume we'd need:
A solid lease agreement.
Proof of rental income (bank statements showing deposits).
What about tax returns? Would they need to see Schedule E from our personal returns, or would they consider the LLC's financials?
How do banks typically treat the income? Do they use 75% of the gross rent? Is there a minimum debt-service coverage ratio (DSCR) they look for, even on a single-family rental?
Does the fact that it's a Section 8 tenant with guaranteed income help or hinder the application in the eyes of a conventional underwriter?

Property Snapshot:

Type: Single-Family Home
Location: Decatur, IL
Status: Rented
Rent: $1,200/month (Section 8)

If anyone has successfully navigated a similar refinance with a local or national bank, I would be incredibly grateful for any insights. What was your experience? Which banks are known to be more rental-property-friendly for investors?

Thanks in advance for sharing your knowledge!

Eduardo Cambil
As others have said, a DSCR loan may be the perfect fit. No income verification and a focus on the property make it sound like a potential fit for you. Reach out if you have any questions!
0 Reply
- Eduardo Cambil
  OP
  Investor · USA · Member since 2024 · 156 posts · 50 votes
  11mo
  Quote from @Andrew Zamboroski:
  
  Quote from @Eduardo Cambil:
  
  Hi BiggerPockets Community,
  
  I'm looking for some advice on refinancing a rental property through a conventional bank and would love to tap into the collective experience here.
  
  We currently own a single-family rental in Decatur, IL, which is occupied by a Section 8 tenant with a stable rent of $1,200/month. While we've used DSCR loans in the past for their simplicity, the underwriting can be a lengthy process, and we're exploring if a more traditional route with a conventional bank might be a better fit for this property.
  
  Our Goal:
  We want to pull equity out of this property via a cash-out refinance to fund a new acquisition. Ideally, we'd like to do this through a conventional bank, using the property's rental income to qualify.
  
  Our Main Questions:
  
  Is it possible for a conventional bank to approve a loan primarily based on the property's rental income, rather than our personal W-2 income? We operate through our LLC, C&T Global Solutions LLC.
  What specific documentation would a "normal" bank require? I assume we'd need:
  A solid lease agreement.
  Proof of rental income (bank statements showing deposits).
  What about tax returns? Would they need to see Schedule E from our personal returns, or would they consider the LLC's financials?
  How do banks typically treat the income? Do they use 75% of the gross rent? Is there a minimum debt-service coverage ratio (DSCR) they look for, even on a single-family rental?
  Does the fact that it's a Section 8 tenant with guaranteed income help or hinder the application in the eyes of a conventional underwriter?
  
  Property Snapshot:
  
  Type: Single-Family Home
  Location: Decatur, IL
  Status: Rented
  Rent: $1,200/month (Section 8)
  
  If anyone has successfully navigated a similar refinance with a local or national bank, I would be incredibly grateful for any insights. What was your experience? Which banks are known to be more rental-property-friendly for investors?
  
  Thanks in advance for sharing your knowledge!
  
  Eduardo Cambil
  As others have said, a DSCR loan may be the perfect fit. No income verification and a focus on the property make it sound like a potential fit for you. Reach out if you have any questions!
  Hi Andrew,
  
  Thanks a lot for the insight — totally agree that DSCR loans are a great fit when you want the underwriting to focus on the property instead of personal income.
  
  The main challenge I’m running into right now is that DSCR origination and closing fees are quite high for small balances. For example, I’m looking to refinance a $56K property on seller finance, which only cost me about $6K to close, and most DSCR quotes I'm seeing are $7K–$8K in fees just to refinance. At that price point, it just doesn’t make sense.
  
  Do you know of any DSCR lenders or programs with lower fees on sub-$100K loans, or any alternative structure that could work better for a small-balance refi like this?
  
  Appreciate your help and willingness to share your experience.
  
  Best,
  Eduardo
  0 Reply
Stacy RaskinBusiness Member
Lender · Member since 2022 · 1k+ posts · 526 votes
11mo
DSCR loans are an easier underwrite than a conventional loan. It's important to work with a broker or lender that specializes in DSCR loans as that will make a big difference in investor experience in the loan process along with the rates, terms and program guidelines. The loan is structured with the actual or projected rents.
A conventional loan will require debt to income / DTI ratios.
Happy to connect to discuss further.
[email protected]818-770-0340
Bright Skyline517 Reviews
Website View Page
0 Reply
- Eduardo Cambil
  OP
  Investor · USA · Member since 2024 · 156 posts · 50 votes
  11mo
  Quote from @Stacy Raskin:
  
  DSCR loans are an easier underwrite than a conventional loan. It's important to work with a broker or lender that specializes in DSCR loans as that will make a big difference in investor experience in the loan process along with the rates, terms and program guidelines. The loan is structured with the actual or projected rents.
  A conventional loan will require debt to income / DTI ratios.
  Happy to connect to discuss further.
  
  Hi Stacy,
  
  Thanks so much for the clarification — really appreciate your explanation on the difference between DSCR and conventional loans. It definitely helps to understand how lenders underwrite them, especially in terms of DTI vs. projected rents.
  
  My only challenge right now is that DSCR loan origination and closing fees are quite high. For example, I’m trying to refinance a $56K property (seller finance) that only cost me $6K to close, and most DSCR lenders are quoting $7K–$8K in fees just to refinance — which makes no financial sense at that price point.
  
  Do you happen to know any lenders or programs with lower DSCR fees or reduced closing costs, especially for sub-$100K refinances? Even a recommendation would help a lot.
  
  Thanks again for your time and willingness to share your knowledge — it’s really appreciated.
  
  Best regards,
  
  Eduardo
  [email protected]
  0 Reply
- Stacy RaskinBusiness Member
  Lender · Member since 2022 · 1k+ posts · 526 votes
  11mo
  Quote from @Eduardo Cambil:
  
  Quote from @Stacy Raskin:
  
  DSCR loans are an easier underwrite than a conventional loan. It's important to work with a broker or lender that specializes in DSCR loans as that will make a big difference in investor experience in the loan process along with the rates, terms and program guidelines. The loan is structured with the actual or projected rents.
  A conventional loan will require debt to income / DTI ratios.
  Happy to connect to discuss further.
  
  Hi Stacy,
  
  Thanks so much for the clarification — really appreciate your explanation on the difference between DSCR and conventional loans. It definitely helps to understand how lenders underwrite them, especially in terms of DTI vs. projected rents.
  
  My only challenge right now is that DSCR loan origination and closing fees are quite high. For example, I’m trying to refinance a $56K property (seller finance) that only cost me $6K to close, and most DSCR lenders are quoting $7K–$8K in fees just to refinance — which makes no financial sense at that price point.
  
  Do you happen to know any lenders or programs with lower DSCR fees or reduced closing costs, especially for sub-$100K refinances? Even a recommendation would help a lot.
  
  Thanks again for your time and willingness to share your knowledge — it’s really appreciated.
  
  Best regards,
  
  Eduardo
  [email protected]
  
  Hi Eduardo,
  I would expect to pay around $5-6K in lender fees as some fees are set no matter the loan amount. The lender will charge an underwriting fee for DSCR loans- from what I see, it's generally $1,995 and up. Then there's another lender or broker fee that is usually paid at closing which is borrower paid compensation (BPC). There is usually a minimum that a company will do the loan for. It's the same work to do a $50K loan as it's to do a $500K loan. Often in conventional loans, this fee gets put into the rate of the loan and it's called lender paid compensation (LPC). So there's a certain base rate for that borrower credit profile and LTV and the rate goes up to cover that fee. Most DSCR loans are generally borrower paid compensation.
  There are other fees such as for Title and recording but those are not lender fees. There is also usually escrow accounts that need to be funded with a certain amount of months of property taxes and insurance.
  [email protected]818-770-0340
  Bright Skyline517 Reviews
  Website View Page
  0 Reply
Frankie VozziBusiness Member
Member since 2025 · 392 posts · 99 votes
10mo
Hi Eduardo, great post and very common scenario for investors scaling their portfolio. I sent you a Dm, let's connect!

[email protected]516-888-7750
0 Reply

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