What is a bridge loan in real estate?

A bridge loan is a short-term, interest-only loan secured by real estate that provides fast capital for time-sensitive investment deals. Bridge loans typically close in 3 to 14 business days, have terms of 6 to 24 months, and lend up to 70 to 75 percent of the property value. Qualification is asset-based — no W-2s or personal tax returns required.

How does a bridge loan get repaid?

A bridge loan is repaid through one of two defined exit strategies: selling the property or refinancing into a long-term loan such as a DSCR loan or conventional mortgage. Borrowers must have a clear exit strategy before taking on a bridge loan, as the short loan term — typically 6 to 24 months — means repayment is required relatively quickly.

What is the maximum loan-to-value for a bridge loan?

Most bridge loan programs lend up to 70 to 75 percent of the property's current or as-is value. For fix and flip bridge loans, lenders may lend up to 90 percent of the purchase price and 100 percent of rehab costs, as long as the total loan does not exceed 70 to 75 percent of the after-repair value. Loan amounts and LTV limits vary by lender and property type.

What credit score do I need for a bridge loan?

Most bridge loan programs require a minimum credit score of 620 to 660. Because bridge loans are asset-based and secured by real estate, credit score requirements are typically more flexible than conventional loans. Lenders focus primarily on the property value, the borrower's exit strategy, and the loan-to-value ratio rather than personal income or employment history.

When should an investor use a bridge loan instead of a DSCR loan?

Use a bridge loan when speed is essential and a deal cannot wait for standard underwriting, when a property needs rehabilitation before it can qualify for long-term financing, or when the property does not yet generate rental income. DSCR loans are better suited for stabilized rental properties with steady cash flow. A bridge loan is often the first step, with a DSCR loan as the refinance exit strategy.

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 Loans for LLCs: How to Finance Rental Properties in an Entity

May 28
6 min read

Most real estate investors eventually move their properties into an LLC — and the good news is that DSCR loans are fully available to LLCs, corporations, and other business entities.

In fact, many DSCR lenders prefer it.

Here's everything you need to know about getting a DSCR loan under an LLC, what lenders require, and how entity-based financing differs from personal ownership.

Quick Answer: DSCR loans are available to single-member LLCs, multi-member LLCs, corporations, and trusts. Most non-QM lenders that offer DSCR loans are set up to lend to entities. The loan qualifies based on the property's rental income — not your personal income — and the borrower is the LLC rather than you as an individual. Personal guarantees are typically required from all members with 20% or more ownership.

Why Real Estate Investors Use LLCs

Before getting into how LLC DSCR loans work, it helps to understand why investors use LLCs in the first place.

Asset protection is the primary reason. If a tenant sues over a property-related injury, an LLC limits your personal liability — the lawsuit is against the entity, not you personally.

This separation between your personal finances and your investment properties is one of the most important steps in building a real estate portfolio.

Other reasons investors use LLCs include:

Estate planning — easier to transfer ownership through the entity
Privacy — in many states, LLC ownership is less publicly visible than personal ownership
Tax flexibility — LLCs can be structured as pass-through entities or taxed as S-Corps depending on your accountant's recommendation
Portfolio organization — separate LLCs for separate properties keeps liability contained

The question investors often ask is whether moving properties into an LLC will complicate financing. With conventional loans, the answer is often yes. With DSCR loans, the answer is generally no.

How DSCR Loans Work for LLCs

A DSCR loan issued to an LLC works the same way as one issued to an individual — the loan qualifies based on the property's debt service coverage ratio (rental income divided by the mortgage payment). The difference is that the borrowing entity is the LLC rather than you as a person.

The loan structure:

The LLC is named as the borrower on the loan documents
The property is titled in the LLC's name
A personal guarantee is required from the principal member(s)

The DSCR ratio, credit score, and down payment requirements are generally the same as for individual borrowers.

Because DSCR loans are non-QM products offered by private lenders rather than Fannie Mae or Freddie Mac, lenders have built their underwriting guidelines around entity borrowers.

Ready to Finance Your Rental Property Under a LLC?

Review DSCR loan programs available to LLCs, single-member entities, and corporations.

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What Lenders Require for a LLC DSCR Loan

Here's what you'll typically need to have in place when applying for a DSCR loan under an LLC:

LLC Documentation

Articles of Organization — the document that established the LLC in your state
Operating Agreement — outlines the ownership structure and member responsibilities
EIN (Employer Identification Number) — issued by the IRS; required to open business accounts and for lender verification
Certificate of Good Standing — confirms the LLC is active and in good standing with the state
LLC formation date — most lenders require the LLC to have been formed before the loan closes; same-day formations are sometimes acceptable

Personal Guarantee Requirements

Even though the LLC is the borrower, lenders require personal guarantees from all members who own 20% or more of the entity. This means:

If you own 100% of the LLC, you personally guarantee the loan
If you have two 50% partners, both partners usually sign personal guarantees
Your personal credit score is pulled and used in underwriting
Your personal financials will not be reviewed, as the loan qualifies on DSCR

This personal guarantee requirement is standard across virtually all DSCR lenders. It protects the lender in the event the property fails to perform.

Property Requirements

The property requirements for an LLC DSCR loan are the same as for any DSCR loan:

1–4 unit residential investment property, or 5+ unit multifamily (depending on the lender's program)
The property must be non-owner-occupied

The DSCR must typically be 1.0 or higher (rental income covers the mortgage payment)

A formal appraisal with a rent schedule is required. Most DSCR programs require a down payment of 20–25% regardless of whether the borrower is an individual or an LLC.

Single-Member vs. Multi-Member LLCs

Both single-member and multi-member LLCs can get DSCR loans, but there are some differences in how lenders evaluate them.

Single-member LLCs (one owner) are the simplest. The loan is guaranteed by that one individual. Underwriting looks at one person's credit and one set of personal financials.

Multi-member LLCs require personal guarantees from all members with 20% or more ownership. Lenders typically use the middle score of the lowest-qualifying borrower.

Tip: If you have a business partner with weaker credit, discuss this with your lender before applying.

Series LLCs and Holding Companies

Some investors use a series LLC — a single LLC that contains multiple series or sub-cells, each holding a different property. Series LLCs are recognized in some states (Texas, Delaware, Illinois, and others) but not all.

Some lenders will lend to a series LLC; others will not
The lender will want to see documentation confirming which series holds the specific property being financed
If you use a holding company that owns multiple LLCs, you'll need to provide full documentation of the ownership chain

The LLC DSCR Loan Process: Step by Step

Form your LLC — file Articles of Organization with your state and obtain your EIN from the IRS
Open a business bank account — required by most lenders; keeps entity finances separate from personal
Find your property — or if refinancing an existing property, confirm it can be titled in the LLC
Apply for the DSCR loan — submit entity documents, personal guarantor information, and property details
Order appraisal with rent schedule — lender will order this to verify the DSCR
Close the loan — the LLC signs as borrower; personal guarantors sign the guarantee
Title in the LLC — the property deed is recorded in the LLC's name

Bottom Line

DSCR loans are fully available to single-member and multi-member LLCs — lenders are built for entity borrowers
The LLC is the borrower; personal guarantees are required from all members with 20%+ ownership
Lenders require Articles of Organization, Operating Agreement, EIN, and Certificate of Good Standing
No personal income documentation required — the loan qualifies on the property's DSCR
LLC DSCR loans generally do not appear on your personal credit report

Frequently Asked Questions

Can I get a DSCR loan if my LLC was just formed?

Yes. Most DSCR lenders do not require the LLC to have a business history or prior track record. The loan qualifies on the rental property's income, not the LLC's operating history. Same-day LLC formations are sometimes acceptable; check with your lender before closing.

Do all members of the LLC have to personally guarantee the loan?

Most DSCR lenders require personal guarantees from all members who own 20% or more of the LLC. If you have two 50% partners, both must sign personal guarantees. Your personal credit score is reviewed during underwriting, and the personal guarantee remains legally binding even though the LLC is the named borrower.

Can I use one LLC for multiple DSCR loans?

Yes. Many investors hold multiple properties under a single LLC, and DSCR lenders will finance multiple properties in the same entity. Some investors and attorneys prefer separate LLCs per property to limit cross-liability — that decision is best made with a real estate attorney.

Will my LLC DSCR loan appear on my personal credit?

Typically no. DSCR loans made to LLCs are business loans and generally do not appear on your personal credit report. However, your personal credit score is still reviewed during underwriting, and the personal guarantee remains legally binding.

What documents does the lender need from my LLC?

Lenders typically require Articles of Organization, the Operating Agreement, your EIN, and a Certificate of Good Standing from your state. Some lenders also require the LLC to have its own bank account. Formation documents must clearly show the member ownership structure.

Ready to Finance Your Rental Property Under a LLC?

Grafton Funding works with individual borrowers and entities — including single-member LLCs, multi-member LLCs, and corporations. If you're ready to build or expand your rental portfolio under an LLC, we can walk you through the process.

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