Model your exit from a hard money or bridge loan into a long-term DSCR refinance. Compare payments, see monthly savings, and check if your property qualifies.
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Everything you need to know about exiting your bridge loan into permanent financing
Hard money and bridge loans serve a critical purpose: they let you close fast on properties that need renovation or don't yet have rental income. But they're designed to be short-term. With rates typically running 10–14% and terms of 6–18 months, the carrying costs add up fast. Every month you stay in a hard money loan erodes the profit margin on your deal.
A DSCR refinance replaces that expensive short-term debt with a long-term mortgage at a fraction of the rate. You move from 12% interest-only to a 30-year fixed at 7–8%, dramatically reducing your monthly payment and unlocking positive cash flow from the property.
On a $300K loan, dropping from 12% IO to 7.5% amortizing can save $800–1,000/month.
The BRRRR method — Buy, Rehab, Rent, Refinance, Repeat — depends entirely on the refinance step. You use hard money to acquire and renovate the property, stabilize it with a tenant, then refinance into a DSCR loan based on the after-repair value (ARV) and rental income. This calculator models that exact exit.
The key question is whether your stabilized property generates enough rental income to qualify for a DSCR loan. Enter your numbers above to find out. If your DSCR comes in at 1.25 or higher, you'll qualify for the best rates and can likely pull cash out to fund your next deal.
When estimating your new loan amount, remember that DSCR lenders typically cap LTV at 75–80% of the appraised value (ARV). If your property appraises at $420,000 and the lender allows 75% LTV, your max new loan is $315,000. Use this as your "New Loan Amount" above.
Most DSCR lenders require the property to be stabilized before refinancing. This means renovations are complete, the property has a tenant in place (or a 1007 rent schedule appraisal), and you've met any seasoning requirements. Common seasoning periods:
| Refinance Type | Typical Seasoning | Notes |
|---|---|---|
| Rate & term refi | 0–3 months | New loan ≤ current balance; some lenders allow immediate refi |
| Cash-out (at cost basis) | 3–6 months | Loan up to purchase price + rehab costs; shorter wait |
| Cash-out (at ARV) | 6–12 months | Loan based on appraised value; most lenders require 6+ months |
Understanding the structural differences between these two loan types explains why the refinance makes sense:
Interest rate: Hard money runs 10–14%; DSCR loans are typically 7–9%. That 3–6% spread translates directly into monthly savings.
Amortization: Hard money is usually interest-only, meaning zero equity buildup. A 30-year DSCR loan amortizes, so part of every payment builds equity in the property.
Term: Hard money terms are 6–18 months with balloon payments. DSCR loans offer 30-year fixed or 5/1 ARMs, eliminating refinance pressure.
Qualification: Hard money focuses on the deal and the borrower's experience. DSCR loans focus on the property's rental income. Once your property is generating rent, the DSCR loan is the natural next step.
Don't wait until your hard money loan is about to mature to start the refi process. DSCR loans typically take 3–5 weeks to close. Start shopping lenders 60–90 days before your hard money maturity date to avoid extension fees or default risk.
Your DSCR ratio on the new loan depends on two things: the property's net operating income (rental income minus operating expenses) and the new mortgage payment. You can improve your DSCR by:
Maximizing rent. Make sure your rent is at or above market rate. Even a small rent increase can push your DSCR above the 1.25 threshold for better terms.
Reducing the loan amount. A lower loan amount means a smaller monthly payment and a higher DSCR. If you're close to 1.25, consider bringing a bit more cash to closing to reduce the new loan.
Shopping rates. Every quarter-point reduction in your new rate improves your DSCR. Get quotes from multiple DSCR lenders before committing.
As soon as the property is stabilized — renovations complete, tenant in place, and any seasoning period met. Most investors target 3–6 months after acquisition. The sooner you exit, the less you pay in hard money interest. Start the refi process 60–90 days before your hard money maturity to ensure a smooth transition.
Yes — this is one of the most common exit strategies. Once the property has rental income, you can refinance into a 30-year DSCR loan based on the property's cash flow rather than your personal income. The DSCR loan pays off the hard money balance and gives you long-term, lower-rate financing. Most DSCR lenders are familiar with this transition and many specialize in it.
Most DSCR lenders require a minimum of 1.0, meaning the property's net income at least covers the new mortgage payment. A DSCR of 1.25+ qualifies for the best rates and terms. Some lenders offer programs for ratios as low as 0.75, but expect higher rates and larger down payments. Use the calculator above to test whether your property qualifies.
Savings depend on the rate spread and loan size. On a $300,000 loan, moving from 12% interest-only ($3,000/month) to 7.5% fully amortizing (~$2,098/month) saves about $900/month. However, part of the new DSCR payment goes toward principal, so you're also building equity. The net effect is lower cash outflow plus wealth building through amortization.
It varies by lender and refinance type. Rate-and-term refis (new loan ≤ current balance) may have no seasoning requirement. Cash-out refis at cost basis typically require 3–6 months. Cash-out at appraised value (ARV) usually requires 6–12 months. Some lenders are more flexible — shop around if timing is critical to your exit strategy.
Yes, virtually all DSCR refinances require a full appraisal. For BRRRR investors this is actually the key step — the appraisal reflects your after-repair value, which should be significantly higher than your all-in cost. A higher appraised value lowers your LTV ratio, potentially qualifying you for better rates or a cash-out amount that recovers your initial investment.
Cap rate measures return on the total property value (NOI ÷ property value) regardless of financing. DSCR measures whether the property's income covers the mortgage payment specifically (NOI ÷ debt service). You can have a great cap rate but a poor DSCR if the property is highly leveraged. For refinancing purposes, DSCR is the metric that determines loan qualification.
Get a no-obligation DSCR refi quote from a specialist who has closed hundreds of hard money exits. We'll review your numbers and walk you through your options.
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