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Long Term Rental Loans
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Real-Estate Investing Made Easy!
Our industry leading real-estate investor loan makes buying or refinancing rental properties easy. We utilize a property’s DSCR (debt-service-coverage-ratio) to qualify the loan; meaning, your loan is qualified based on the cashflow and market rents of the property.
We compare the potential rental income to the proposed mortgage payment and if the rental income is equal to, or greater than, the mortgage payment – the property is qualified. We do it all while offering great rates, a seamless process, and best of all NO LENDER FEES!
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Long-Term Rentals
Long-term rentals, at times referred to as buy-and-holds, are rental properties that are purchased and rented out for long-term leases. An LTR property can range from a single-family home, townhouse, multi-family home, apartment or condo and is associated with providing tenants accommodation for an extended period; generally, a minimum duration of six months or greater. Long-term rentals usually are not furnished and since turnover is low, owners can save money in marketing costs, as they do not need to advertise the space as often as a short-term rental requires.
LTRs are one of the most popular, and lucrative, ways to invest in real estate. When you invest in short-term rental properties, rental income is potentially not as reliable as that of LTRs, due to factors such as location, tourist attractions and seasons; owners often also spend more effort and time on maintenance. On the contrary, LTRs require less work in terms of upkeep, key exchange, organizing check-ins/outs, etc.—and because LTR properties are accompanied with relatively constant occupancy, this places the owner in a preferable position to mitigate risk of vacancy for extended periods.
Begin accumulating properties that you can invest in passively or actively. Our investor loan is built for clients who want to establish a real estate business that generates large profits and ensures consistent and stable rental income. Using NONI’s simple qualification process, we approach scaling into numerous properties with ease. Instead of using client’s personal incomes, we easily qualify a loan based on either the LTR’s liquidity, its market rental rate, the property value and purchase price or the tenant lease amount.
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Long Term Rentals
Frequently Asked Questions
For DSCR loan purposes, long-term rentals are defined as properties leased for six months or longer, usually on annual leases. These include traditional residential rentals, single-family homes, condos, townhomes, and small multi-family properties (2-4 units) rented to tenants using the property as their primary residence. Long-term rentals are distinguished from short-term vacation rentals or properties rented for 30 days or less. Lenders view them as less risky because they provide stable, predictable income with lower vacancy rates and reduced management compared to short-term rentals.
Lenders use several methods to determine rental income for DSCR calculations. If the property has a tenant, they use the existing lease agreement showing the monthly rent. For vacant properties or new purchases, lenders order an appraisal with a market rent analysis (Form 1007 or rent schedule), estimating fair market rent based on comparable properties. Some accept 75-80% of the appraised market rent to account for vacancy and maintenance costs. If you've owned the property and have a rental income history, some lenders review it from your tax returns, though this is less common with DSCR loans.
Down payment requirements for long-term rental DSCR loans typically range from 20% to 25% of the purchase price or appraised value. The exact percentage depends on factors like credit score, property's DSCR ratio, loan amount, and property type. Single-family homes often qualify with 20% down, while multi-family properties (2-4 units) may require 25%. Excellent credit (720+) and strong DSCR ratios (1.25+) allow lower payments around 15-20%. Larger amounts secure better interest rates and qualify with a lower DSCR ratio or credit score.
No, DSCR loans for long-term rentals have no owner-occupancy requirements since they're designed for investment properties. You're not required to live in the property and can rent it out immediately after closing. This is a key advantage over owner-occupied mortgages which require you to live in the property as your primary residence for at least 12 months. However, it must be used as a rental, you cannot leave it vacant or use it as a second home. The expectation is that you'll generate rental income from the property, as that's the basis for your loan qualification.
Absolutely. DSCR loans are excellent for cash-out refinances on existing rental properties. Many investors use this refinancing to pull equity from performing rentals for investments, renovations, or business needs. The process is similar to a purchase: the lender evaluates the property's rental income and DSCR ratio instead of your personal income. You can typically refinance up to 75-80% of the appraised value. This strategy is popular for portfolio building because it allows access to equity without selling, and you won't need to provide personal income documentation like tax returns or pay stubs.
Lake Forest, CA 92630, NMLS#133519