Can I refinance a hard money loan into a DSCR loan?
Yes, refinancing a hard money loan into a DSCR loan is the most common exit strategy, typically available once the property is rent-ready and leased, seasoning of 3 to 6 months is met for a rate-and-term refinance, and the rent covers the new payment at a coverage ratio of about 1.20 or better. Your credit score also needs to meet the DSCR lender's minimum, typically 660, since hard money lenders generally do not check credit closely.
Why this sequence works
Hard money is short-term and expensive, priced against the property's equity with little regard for income documentation. A DSCR loan is a 30-year permanent loan priced against the property's rental income. The move from one to the other is the standard bridge between acquiring/renovating and holding long-term.
What has to be true to refinance
| Requirement | Typical standard |
|---|---|
| Property condition | Renovation complete, permits closed, rent-ready |
| Occupancy | Leased, or vacant with strong market rent support |
| Seasoning | 3 to 6 months for rate-and-term; 6 to 12 for cash-out |
| Coverage | 1.00 to 1.25 depending on lender and pricing tier desired |
| Credit | 660 minimum typical, since hard money lenders rarely check it |
| Reserves | 3 to 6 months of the new payment |
Ranges vary by lender.
The credit gap
Because hard money lenders often skip or barely check credit, some borrowers who used hard money to move fast on a deal have not confirmed their credit qualifies for the DSCR refinance that follows. Pull your credit before or during the hard money term, not after, so there is time to fix a score that falls short.
Timing against the hard money maturity
Hard money loans typically run 6 to 18 months. Line up the DSCR refinance to close before maturity, with a cushion, since hard money extension fees and default rates are expensive. If the renovation runs long, request the hard money extension early rather than rushing an underprepared DSCR application.
A worked example
Hard money loan of $320,000 at 12 percent, 9-month term, on a property bought for $260,000 with $70,000 rehab. Renovation finishes at month 4, leased at $2,900 by month 5. At month 6, seasoning is met, appraisal comes in at $460,000, and a DSCR refinance at 75 percent produces $345,000, paying off the hard money loan and covering closing costs, with a coverage ratio of about 1.24 on the new payment.
What goes wrong
- Rent comes in below projection, coverage ratio misses.
- Credit did not qualify and was never checked during the hard money term.
- Appraisal misses the value needed to pay off the hard money balance.
- The hard money loan matures before the DSCR loan closes.
How CommFi handles it
Our lending desk prices the hard money loan and the DSCR exit together on day one so credit, coverage, and timing are all confirmed before you close the first loan. It funds direct when it fits, and when a specific DSCR lender's seasoning rule is the better match, the desk searches a database of 7,000+ lenders and the ones that fit compete for the file. Zero upfront fees.
Related reading
Related questions
- Can I refinance a hard money loan into a DSCR loan?
- Yes, this is the most common exit from hard money, once the property is rent-ready, seasoning is met, and the rent covers the new payment.
- Does hard money check my credit before I refinance?
- Rarely closely. Check your credit yourself during the hard money term so you know it qualifies for the DSCR refinance.
- How soon can I refinance hard money into a DSCR loan?
- Often at 3 to 6 months for a rate-and-term refinance, once the property is leased and seasoning is met.
- What if my hard money loan matures before I can refinance?
- Request an extension from the hard money lender early, before applying for the DSCR loan under time pressure.
- What DSCR do I need to refinance out of hard money?
- Around 1.20 for good pricing. Some lenders accept lower ratios at reduced leverage.
Property developer and licensed appraiser. 22+ years in real estate: TIC conversions, multi-unit redevelopments, mixed-use, fix and flips, commercial DSCR.