Frequently Asked
Questions
Common questions about investment property loans from Grafton Funding
What is a DSCR loan and how does it work?
A DSCR (Debt Service Coverage Ratio) loan qualifies borrowers based on a rental property's income rather than personal income. The lender divides the property's gross rental income by the total monthly debt payment. A ratio of 1.0 means income equals expenses; we require a 1.0 or higher. No tax returns, W-2s, or pay stubs are required — making DSCR loans ideal for self-employed investors and those with complex finances.
Can I use a DSCR loan for a short-term rental or Airbnb property?
Yes. Many lenders — including Grafton Funding — accept short-term rental income for DSCR calculations. We typically use either a market rent analysis from AirDNA or 12 months of documented STR revenue from platforms like Airbnb or VRBO. Properties in strong vacation rental markets (Florida, Tennessee, Texas, etc.) often qualify with favorable ratios.
What credit score do I need for a DSCR loan?
Most DSCR lenders require a minimum 640 credit score, with better rates and LTVs available at 700+ and the best pricing at 740+. A higher credit score can offset a lower DSCR ratio in some cases. Grafton Funding works with investors across the credit spectrum and can often find programs even for scores in the 640–660 range.
Can I take out a DSCR loan in an LLC?
Absolutely. DSCR loans are one of the few mortgage products that allow — and even encourage — borrowing in the name of an LLC or other entity. This is a major advantage for investors who want liability protection. Grafton Funding routinely closes DSCR loans in single-member and multi-member LLCs, as well as LLCs held under an irrevocable trust structure.
What types of properties qualify for DSCR financing?
DSCR loans work for most income-producing residential investment properties: single-family rentals, condos, townhomes, 2–4 unit multifamily, and short-term rentals. Grafton Funding also offers DSCR products for 5–10 unit properties. Primary residences and second homes do not qualify — the property must be a non-owner-occupied investment.
How does a fix and flip loan work?
Fix and flip loans (also called hard money or bridge loans) are short-term financing used to purchase and renovate a distressed property. The loan is typically based on the After-Repair Value (ARV) of the property as well as the current value. Grafton Funding offers up to 90% of purchase price and 100% of rehab costs, with terms of 6–24 months. Once the renovation is complete, investors either sell for profit or refinance into a DSCR loan to hold as a rental.
Can first-time investors qualify for these loans?
Yes — first-time real estate investors are welcome. DSCR loans don't require landlord experience, and fix and flip loans can be structured for first-timers with the right deal and down payment. Having a solid credit profile, adequate reserves, and a well-priced property makes approval much smoother. Grafton Funding's team is happy to walk new investors through the process step by step.
What states does Grafton Funding lend in?
Grafton Funding primarily serves investors in Texas, Florida, Georgia, North Carolina, and South Carolina, but we lend in most states across the nation. These are among the strongest rental and appreciation markets in the country.
How much can I borrow, and what's the maximum LTV?
For DSCR loans, Grafton Funding typically offers up to 80% LTV on purchases and 75% LTV on cash-out refinances. Loan amounts generally range from $75,000 to $3 million. For fix and flip loans, we lend up to 90% of purchase price and 100% of rehab costs, capped at 70–75% of ARV, and we have no minimum loan amount. Higher LTVs may be available for experienced investors with strong credit.
How fast can I close?
DSCR loans typically close in 21–30 days. Fix and flip / hard money loans can close in as little as 2–3 business days when all documentation is in order. Speed is one of our key advantages — if you're competing for a deal, contact us early so we can issue a pre-approval or proof of funds letter quickly.
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