Dscr brrrr Investors

BRRRR - Buy, Rehab, Rent, Refinance, Repeat
9moFollow

Dscr brrrr Investors

Lipa F.
Investor · Member since 2024 · 79 posts · 32 votes

Anyone has tried that?

Instead of a cash-out refi, do a rate-and-term DSCR refi to lock in the lower rate, then add a DSCR HELOC behind it.

Cash-out DSCR usually tops out around 75%. Even at 80%, the rate jump is rough and makes it hard to get all your capital back. Rate-and-term pricing is way better.

With the HELOC, you can sometimes get to ~85% combined. HELOC rate is higher, but it's only on part of the stack, so blended cost still comes out lower.

End goal: more cash out, better rates overall. Curious if anyone’s run this and how it played out.

1Reply
255 views

Most Popular Reply

Devin PetersonBusiness Member
Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 673 votes
9mo

DSCR Helocs are an anomaly. I have not seen or heard of a reputable lender who will truly lend to you a heloc underwrite as a DSCR with a competitive rate. The best you can do is a heloan 2nd with DSCR and at that rate, you might as well stick with the first cash out. The only true way to get a heloc on an investment to is to actually occupy it as a true primary before you move out and repurpose it.

[email protected]860-538-3672
ProAlpha Capital56 Reviews
WebsiteView Page
2Reply
See this reply in the discussion

10 Replies

Jump to latestLatest
  • Andrew PostellPro Member
    Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
    9mo

    @Lipa F. we usually don't do this because of 2 main reasons:

    1. 2nd lien HELOCs usually have a significant higher rate than the prevailing rate for conventional and DSCR loans.

    2. We also usually don't do a "cash out" refinance on BRRRR properties. I know this might be counter to what some "videos" might suggest. Generally, our "Buy" loans give us 75% of the ARV on the property. So, there's no chance of doing any cash out loan anyway. Getting an initial loan at 75% allows us to not have to come out of pocket as much and then we "Refinance" into a "no cash out" loan when we refinance.

    Hope that makes sense.

    0Reply
  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 673 votes
    9mo

    DSCR Helocs are an anomaly. I have not seen or heard of a reputable lender who will truly lend to you a heloc underwrite as a DSCR with a competitive rate. The best you can do is a heloan 2nd with DSCR and at that rate, you might as well stick with the first cash out. The only true way to get a heloc on an investment to is to actually occupy it as a true primary before you move out and repurpose it.

    [email protected]860-538-3672
    ProAlpha Capital56 Reviews
    WebsiteView Page
    2Reply
  • Stacy RaskinBusiness Member
    Lender · Member since 2022 · 1k+ posts · 518 votes
    8mo

    I've never seen a DSCR Heloc product that actually funds. Also, rates on Helocs are generally going to be higher than rates on a first position mortgage such as a DSCR loan.

    Using a rate and term refinance versus a cash out refinance will all things being equal with the borrower credit profile get a better rate as the lender considers a rate and term refinance where a borrower just changes the rates a less risky loan product as large sums of money are not being given to the borrower (so if going from a hard money loan which will generally have a higher rate compared to long term financing such as DSCR financing can be a rate and term refinance).

    Helocs are generally debt to income (DTI) based loans which will be calculated using the borrower's DTI income ratios and verified by paperwork based on the borrower's income and debts.

    [email protected]818-770-0340
    Bright Skyline518 Reviews
    WebsiteView Page
    0Reply
  • Frank PyleBusiness Member
    Specialist · USA · Member since 2024 · 279 posts · 130 votes
    8mo

    Yeah I have seen people do that and it can work if the deal still has breathing room after the second loan. The quick test is rent minus the main payment minus the line payment minus a repairs cushion and if that number is thin it gets tight fast. The big hangups are the first lender not allowing a second loan, the line lender not going as high as you expect, or the value coming in light and the whole plan falls apart.

    If you want a fast gut check, what are you all in on the property, what do you think it is worth today, and what rent are you getting?

    [email protected]317-501-3467
    Frank Pyle at ExP Realty
    WebsiteView Page
    NEXA Lending- Investors Edge Concierge
    View Page
    0Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    8mo
    Quote from @Lipa F.:

    Anyone has tried that?

    Instead of a cash-out refi, do a rate-and-term DSCR refi to lock in the lower rate, then add a DSCR HELOC behind it.

    Cash-out DSCR usually tops out around 75%. Even at 80%, the rate jump is rough and makes it hard to get all your capital back. Rate-and-term pricing is way better.

    With the HELOC, you can sometimes get to ~85% combined. HELOC rate is higher, but it's only on part of the stack, so blended cost still comes out lower.

    End goal: more cash out, better rates overall. Curious if anyone’s run this and how it played out.


    The HELOC is a variable rate in most cases. Additionally it will come at a much higher rate than a traditional cash out refi, so your blended rate will be higher than just doing a regular first.

    I have not heard of any DSCR HELOC lenders offering 85% CLTV, but if you have closed on any, please share it here as it is not really out there :).

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
    WebsiteView Page
    0Reply
  • Sandy Hu
    Rental Property Investor · CA|AZ|MI · Member since 2018 · 59 posts · 22 votes
    8mo
    Quote from @Lipa F.:

    Anyone has tried that?

    Instead of a cash-out refi, do a rate-and-term DSCR refi to lock in the lower rate, then add a DSCR HELOC behind it.

    Cash-out DSCR usually tops out around 75%. Even at 80%, the rate jump is rough and makes it hard to get all your capital back. Rate-and-term pricing is way better.

    With the HELOC, you can sometimes get to ~85% combined. HELOC rate is higher, but it's only on part of the stack, so blended cost still comes out lower.

    End goal: more cash out, better rates overall. Curious if anyone’s run this and how it played out.


     Yes — I’ve seen this work, but it’s very lender- and timeline-specific.

    The rate-and-term DSCR first + HELOC behind it can make sense if the senior lender allows subordinate financing and the valuation supports it. Where people get tripped up is seasoning, HELOC availability post-refi, and DSCR calculations tightening once the HELOC draw is factored into cash flow.

    When it lines up, the blended cost is often better than an 80% cash-out DSCR — but it's less plug-and-play than it looks on paper.

    0Reply
  • Lipa F.
    OP
    Investor · Member since 2024 · 79 posts · 32 votes
    8mo

    Can you please explain the question 

    0Reply
  • Mayo GilfurtPro Member
    Real Estate Consultant · Connecticut Ct · Member since 2026 · 137 posts · 31 votes
    8mo

    This stack can work, but the execution risk is usually in timing and lender overlap.

    A few things I've seen matter in practice: • DSCR HELOC availability is very lender-specific and often capped by property type and seasoning

    • Rate-and-term DSCR refis still tend to want clean stabilization, not just appraised value

    • Combined leverage looks good on paper, but exit flexibility matters if the HELOC reprices

    When it’s done well, it can lower blended cost. When it’s rushed, it creates refi friction later. Curious what asset class you’re testing this on.

    That’s it. Period.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free