Does Grafton Funding offer DSCR loans for rental properties?

Yes — DSCR (Debt Service Coverage Ratio) loans are our most popular product. We lend on single-family rentals, 2–4 unit properties, short-term rentals (like Airbnb and VRBO), and small multifamily up to 10 units. We qualify the property on its rental income rather than your personal income or tax returns. Minimum DSCR is typically 1.0x, and we lend in TX, FL, GA, NC, SC, and other states.

Does Grafton Funding do fix and flip loans or bridge loans?

Yes. We provide fix and flip loans and bridge loans for non-owner occupied investment properties. Our programs cover the purchase price plus rehab costs, with fast closings. Loan terms are short-term (typically 12–18 months) and are designed around the investor's exit strategy — either sale or refinance.

Can I get a DSCR loan for an Airbnb or short-term rental property?

Yes — we specialize in short-term rental (STR) financing. We use either the property's actual Airbnb or VRBO income history or a market-rate STR income estimate to qualify the loan. You don't need W-2s or tax returns.

Does Grafton Funding offer new construction loans for investment properties?

Yes. We offer new construction loans for non-owner occupied residential investment properties, including spec builds, ground-up construction, and lot + build projects. These are short-term loans that fund in draws as construction progresses.

Does Grafton Funding lend in North Carolina?

Yes — we actively lend in North Carolina, including the Charlotte metro, the Triangle (Raleigh/Durham/Chapel Hill), Wilmington, and Asheville. We offer DSCR rental loans, fix and flip loans, and new construction financing for NC investment properties. Local NC line: (910) 218-1286.

Can I qualify for a loan without showing tax returns or personal income?

Yes — our DSCR loans are underwritten based on the property's rental income, not your personal income or tax returns. This makes them ideal for self-employed investors and business owners. We do require a credit check and down payment, but there's no traditional income verification.

What credit score do I need to get a loan from Grafton Funding?

For most DSCR rental loan programs, we generally look for a minimum credit score in the 660–680 range, though this can vary by program and loan-to-value. Fix and flip loans may have different requirements depending on experience and deal strength.

How much do I need to put down for a DSCR loan?

For DSCR rental loans, we typically lend up to 75–80% loan-to-value (LTV), meaning you'd need 20–25% as a down payment. The exact LTV depends on the property type, DSCR ratio, and your credit profile. We lend exclusively on non-owner occupied investment real estate.

How quickly can Grafton Funding close a loan?

Many of our transactions close in 2–4 weeks depending on the loan type, property, and how quickly documentation is provided. We prioritize responsive communication and efficient underwriting for investors who need to move fast on deals.

Does Grafton Funding work with first-time real estate investors?

Yes — we work with both new and experienced investors. For DSCR rental loans, first-time investors are welcome as long as the property cash flows and the borrower meets our credit and down payment requirements. For fix and flip loans, some experience is preferred but not always required.

DSCR Loan Appraisals Explained (How Rental Value Is Determined)

5 days ago
4 min read

Updated: 3 days ago

When applying for a DSCR loan, one of the most important steps in the process is the appraisal.

But DSCR appraisals are different from traditional home appraisals.

Instead of focusing only on property value, lenders also evaluate rental income potential.

Understanding how DSCR appraisals work can help you structure stronger deals and avoid surprises during underwriting.

In a DSCR loan appraisal, rental value is determined using comparable rental properties in the area — not your existing lease or your own estimate. The appraiser completes a rent schedule (Form 1007 for single-family or Form 1025 for multifamily) identifying what similar properties currently rent for, and the lender uses that market rent figure to calculate your debt service coverage ratio, determine loan approval, and set your terms.

What Is a DSCR Loan Appraisal?

A DSCR appraisal determines two key things:

✔ The market value of the property

✔ The market rent the property can generate

This second component is what makes DSCR loans unique.

Lenders use rental income to calculate whether the property qualifies.

What Is a Rent Schedule (Form 1007)?

For single-family rental properties, appraisers typically provide a rent schedule, also known as Form 1007.

This report includes:

• Estimated monthly market rent

• Comparable rental properties

• Rental adjustments based on features

The lender uses this to determine the DSCR ratio.

How Rental Income Is Calculated

Rental income used for DSCR loans is usually based on:

• Market rent (not always actual rent)

• Comparable properties

• Local rental demand

This is why even vacant properties can qualify.

If you want a deeper breakdown, read our guide on projected rent qualification.

How DSCR Ratio Is Calculated From the Appraisal

Once rental income is determined, lenders calculate:

DSCR = Rental Income ÷ Monthly Loan Payment (including taxes, insurance, and any HOA fees)

Example:

Monthly Rent: $2,500

Monthly Payment: $2,000

DSCR = 1.25

Stronger DSCR ratios lead to better loan terms.

Want to Know If Your Deal Will Appraise?

Review your deal before submitting it to a lender.

View DSCR Loan Programs

What Can Cause an Appraisal Issue?

Appraisals can sometimes come in lower than expected.

Common issues include:

• Overestimated rent projections

• Weak rental comps

• Unique or hard-to-value properties

• Market shifts

This can impact:

• Loan approval

• Leverage

• Deal structure

Example Scenario in South Carolina

An investor purchasing a rental property in South Carolina may:

• Buy a property for $300,000

• Expect $2,200/month in rent

The appraiser may determine:

Market Rent: $2,050

This adjusted number is what the lender uses — not the investor’s estimate.

Tips to Improve Your Appraisal Outcome

Experienced investors take steps to strengthen appraisal results:

• Provide strong rental comps upfront

• Choose properties in active rental markets

• Avoid overestimating rent

• Focus on standardized property types

Small details can make a big difference.

DSCR vs Traditional Appraisals

Traditional appraisals focus primarily on:

• Comparable sales

• property condition

DSCR appraisals include:

• rental income analysis

• rent schedules

• income-based evaluation

This makes DSCR loans more aligned with investment strategy.

Key Takeaways

DSCR appraisals determine:

• Property value

• Rental income potential

Both are critical for loan approval.

Understanding how appraisals work helps investors:

✔ Avoid deal surprises

✔ Structure better offers

✔ Improve approval outcomes

Bottom Line

The appraisal is one of the most important steps in the DSCR loan process.

Since rental income drives qualification, getting an accurate rent estimate is essential for success.

Frequently Asked Questions

What type of appraisal is required for a DSCR loan?

Most DSCR lenders require a standard property appraisal plus a rent schedule — Form 1007 for single-family or Form 1025 for 2–4 unit properties. The rent schedule provides an independent market rent estimate lenders use to calculate your DSCR ratio.

Can I use my actual lease instead of the appraised rent?

Most lenders use the lower of the appraised market rent or your actual lease. If the appraiser's rent estimate comes in below your lease rate, the lower figure is used in the DSCR calculation — impacting your rate and approval terms, although there are exceptions to this rule.

What happens if the appraisal comes in lower than expected?

A lower value appraisal reduces your loan amount. A lower rent estimate reduces your DSCR, which can mean a higher rate, a larger down payment, or denial. Providing strong rental comps upfront helps avoid surprises and protects your deal structure.

How long does a DSCR appraisal take?

Typically 7–14 business days from order to receipt, depending on market, property type, and appraiser availability. Some lenders work with preferred appraisal vendors that can speed up the turnaround.

How is DSCR calculated from the appraisal?

DSCR = Monthly Rent ÷ Monthly Loan Payment (principal, interest, taxes, insurance, and HOA). Most lenders require a minimum DSCR of 1.0–1.25. The appraised rent figure — not your actual lease — is used in this calculation.

Ready to Move Forward With Your Investment Property?

Start your DSCR loan review today.

Start Your Pre-Qualification