Can first-time investors get fix and flip loans?

Yes. Many lenders offer specific programs for first-time flippers. The key factor is deal quality — your credit score, a defensible ARV, a detailed scope of work, and adequate reserves matter more than prior flip experience. Having a strong deal at a good price compensates for limited experience in most lenders' eyes.

What credit score is required for a fix and flip loan?

Most lenders require a minimum credit score of 620–640. A score of 680 or higher opens up better rates, terms, and more lender options. Some programs are available for scores in the 600–619 range with additional equity or reserves — ask your lender about first-timer options.

How is the loan amount calculated for a fix and flip loan?

Fix and flip loans are sized based on a percentage of the after-repair value (ARV) — the estimated value of the property once renovations are complete. Most lenders fund up to 65–75% of ARV. The total project cost (purchase price + rehab budget) must stay within this limit. The lender funds the purchase portion at closing; rehab funds are released in draws as work is completed.

How long does it take to close a fix and flip loan?

Fast-moving lenders can close fix and flip loans in 5–10 business days for clean deals. Most close within 2 weeks. This is significantly faster than conventional mortgages — which is why fix and flip lenders are preferred for distressed property acquisitions where motivated sellers want quick closes.

What's the difference between a fix and flip loan and a hard money loan?

They are typically the same product. 'Hard money loan' is an older industry term for short-term, asset-based real estate loans. 'Fix and flip loan' or 'bridge loan' are more commonly used terms today. Both refer to the same loan structure: short-term, interest-only, qualifying on ARV rather than personal income, with draw-based renovation funding.

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 Interest Rates Explained: What Investors Pay in 2026

Oct 6

4 min read

DSCR loan interest rates are one of the most common questions real estate investors ask — and also one of the most misunderstood topics in investor financing.

Unlike conventional mortgage rates, which are heavily driven by the borrower's income, credit score, and debt-to-income ratio, DSCR loan rates are priced based on a different set of factors. Understanding what drives DSCR pricing — and how to position your loan for the best rate available — can save you thousands of dollars over the life of a loan.

Quick Answer: DSCR loan interest rates in 2026 typically run 0.50–1.50% higher than comparable conventional mortgage rates. The exact rate depends on your credit score, LTV ratio, DSCR ratio, property type, and whether you choose a fixed or adjustable rate. Stronger borrower profiles and higher down payments unlock better rates.

Why DSCR Rates Are Higher Than Conventional Rates

DSCR loans are non-QM (non-qualified mortgage) products. They don't conform to Fannie Mae or Freddie Mac guidelines, which means they can't be sold into the agency mortgage-backed securities market the same way conventional loans can.

This has two effects on pricing:

DSCR lenders hold more risk on their balance sheets, or sell into a non-agency secondary market that prices risk differently than agency MBS.
DSCR loans lack the standardized underwriting safeguards that allow agencies to price risk uniformly — so lenders add a spread to compensate for individual deal variability.

The practical result: DSCR rates typically run 0.50–1.50% higher than a conventional 30-year fixed rate on an owner-occupied property, and somewhat closer to — or sometimes above — conventional investment property rates, depending on the borrower profile.

Factors That Determine Your DSCR Loan Rate

Credit Score

Credit score is one of the most significant pricing factors for DSCR loans. The higher your score, the lower your rate.

Credit Score Range	Rate Impact
760+	Best available rates
720–759	Strong rate tier
680–719	Mid-tier pricing
640–679	Higher rate; some programs add 0.50–1.00%
Below 640	Limited programs; higher rate or ineligible

Loan-to-Value (LTV) Ratio

The lower your LTV (equivalently, the more equity or down payment you bring), the better your rate. Lenders price DSCR loans with significant rate adjustments based on LTV.

75% LTV (25% down): Best available rate tier
80% LTV (20% down): Moderate rate adjustment
Above 80% LTV: Rate increases significantly; limited availability

DSCR Ratio

A higher DSCR ratio indicates stronger cash flow, which reduces lender risk and often results in better pricing. Loans with DSCR below 1.0 ('No Ratio' DSCR loans) carry a significant rate premium.

DSCR 1.25+: Strongest cash flow; best rate tier
DSCR 1.0–1.24: Standard pricing
DSCR 0.75–0.99: Rate add-on; limited program availability

Property Type

Single-family residences typically receive the best rates. Condos, 2–4 unit properties, and rural or non-warrantable properties may carry rate premiums.

Loan Amount

Smaller loan amounts (under $150K) and very large loan amounts (above $2M) may carry rate premiums relative to standard loan sizes.

Fixed vs. Adjustable Rate

DSCR loans are available as 30-year fixed, 5/1 ARM, 7/1 ARM, and interest-only products. Fixed-rate products provide payment certainty; ARMs offer lower initial rates but carry repricing risk. Most buy-and-hold investors prefer 30-year fixed DSCR loans for long-term stability.

Ready to Finance Your Investment Property?

Want to see what rate you'd qualify for on a DSCR loan? Grafton Funding provides same-day rate quotes with no commitment required.

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How DSCR Rates Compare to Other Loan Types

Loan Type	Rate vs. DSCR	Key Difference
Conventional (Owner-Occupied)	0.50–1.50% lower	Requires income qualification; primary residence
Conventional Investment Property	0–0.50% lower	Income required; limited to 10 properties
Hard Money / Fix & Flip	1–3% higher	Short-term; asset-based; for value-add projects
Portfolio / Blanket	Similar or slightly lower	For multiple properties; relationship-based
Commercial DSCR	Similar	For 5+ unit properties; different underwriting

How to Get the Best DSCR Loan Rate

Investors who want the best available DSCR rates should focus on the factors within their control:

Maximize your credit score. Rates drop meaningfully above 720 and again above 760. Address any derogatory items, reduce card utilization, and avoid new credit inquiries before applying.
Put more down. Moving from 80% to 75% LTV can reduce your rate by 0.25–0.50%. On a $500,000 loan, that's real money over 30 years.
Target properties with strong DSCR. A property generating 1.25+ DSCR will be priced better than one at 1.0 or below.
Shop multiple lenders. DSCR lenders price differently — some specialize in certain markets or property types and offer better terms for those scenarios.
Consider points buydowns. Paying discount points upfront (typically 1 point = 0.125–0.25% rate reduction) can make sense for long-term holds where you'll recoup the cost over time.

Frequently Asked Questions: DSCR Loan Interest Rates

What are DSCR loan interest rates in 2026?

DSCR loan rates in 2026 vary based on credit score, LTV, DSCR ratio, and market conditions. They typically run 0.50–1.50% above comparable conventional rates. Strong borrower profiles (760+ credit, 75% LTV, 1.25+ DSCR) can achieve rates close to conventional investment property pricing.

Are DSCR loan rates fixed or variable?

Both options are available. Most buy-and-hold investors choose 30-year fixed DSCR loans for payment stability and long-term cash flow predictability. ARM products (5/1, 7/1) offer lower initial rates but carry repricing risk after the fixed period.

Does the property's rental income affect my DSCR loan rate?

Yes. The DSCR ratio — which measures how well rental income covers debt payments — directly affects pricing. Properties with higher DSCR ratios (1.25+) typically receive better rates than those at 1.0 or below. Strong cash flow signals lower risk to lenders.

Can I buy down my DSCR loan interest rate?

Yes. Like conventional mortgages, DSCR lenders offer discount points. Paying 1–2 points upfront can reduce your rate by 0.25–0.50%. Whether this makes sense depends on how long you plan to hold the property. Discuss buydown options with your lender at quote time.

How do DSCR loan rates compare to hard money rates?

DSCR loans are significantly cheaper than hard money or fix and flip bridge loans. Hard money rates typically run 10–14%+, while DSCR rates are priced more like conventional investor mortgages. DSCR loans are for stabilized rentals; hard money is for value-add or distressed properties.