Compare
DSCR vs Fix-and-Flip Loan
Flip loans fund the rehab. DSCR loans fund the hold. Most experienced investors use both — in sequence — on the same property.
The short answer
Choose DSCR if
- The property is already stabilized, leased, and cash-flowing
- You finished a flip and want to keep it as a rental instead of selling
- You're doing the BRRRR refinance after rehab completion
- You want a fixed rate locked in for 30 years (no exit pressure)
- You need to pull cash out for your next acquisition
- You want to vest in an LLC and skip personal income docs
Choose Fix-and-Flip if
- You're buying a property that won't pass a standard appraisal or won't lease as-is
- You need capital for both purchase and renovation in one loan
- Your strategy is to sell at retail within 12 months
- You're in the purchase + rehab phase of a BRRRR and need short-term capital
- You can manage a 12-month exit (sale or refinance) without rate-shock risk
- Your numbers work on ARV (After Repair Value), not current value
Side-by-side: DSCR vs Fix-and-Flip Loan
| Feature | DSCR Loan | Fix-and-Flip Loan |
|---|---|---|
| Loan purpose | Long-term hold of a stabilized, rent-ready property | Purchase + rehab of a value-add project |
| Term length | 15-, 30-, or 40-year fixed (or 5/6, 7/6, 10/6 ARM) | 12 months typical (extensions available at a fee) |
| Rate (typical, 2026) | Investor-grade fixed rate, fully amortizing | 8-12%+ interest-only |
| Points / origination | Standard mortgage origination (typically 1-2 pts) | 2-4 points up front |
| Maximum leverage | Up to 80% of appraised value | Up to 90% LTC (Loan to Cost) on rehab projects |
| Rehab funding | Not included — property must be ready for tenants | Bundled — funded in draws against an approved scope |
| Property condition required | Habitable, lease-ready (C4 or better) | Any condition — distressed assets are typical |
| Income qualification | Property's projected rental income (DSCR) | Asset-based — sponsor experience + project budget |
| Minimum credit score | 640 | 650-680 typical (varies by lender) |
| Closing timeline | 15-21 days | 7-14 days |
| Exit strategy | Hold and cash flow long-term | Sell at retail, or refinance into DSCR (BRRRR) |
FAQ
Yes — this is the standard BRRRR exit. Once the rehab is finished and the property is leased, a DSCR loan refinances out the flip lender at the new appraised value. You replace the 10-12% interest-only flip loan with a 30-year fixed and often pull cash out to fund the next deal.
DSCR loans require the property to be habitable and lease-ready at funding. A distressed property doesn't qualify — and DSCR doesn't fund rehab. If the deal needs work, a fix-and-flip loan covers purchase + rehab; DSCR then takes the loan out once the property is stabilized.
On rate, yes — by a wide margin. DSCR amortizes over 15-40 years at investor-grade rates. Flip loans are interest-only at 8-12%+ for a reason: they're short-term construction-style capital. The two products do completely different jobs at completely different price points.
Buy distressed → Rehab → Rent → Refinance → Repeat. The flip loan funds Buy + Rehab. The DSCR refinance funds Rent + Refinance — paying off the flip loan, cashing the investor out at the new (higher) appraised value, and freeing up capital for the next 'Repeat' cycle.
TQL specializes in permanent investor financing — DSCR, bank statement, P&L, and asset utilization mortgages. We're the take-out lender on the back end of a flip or BRRRR project. If you need rehab funding, we'll point you to a fix-and-flip partner and refinance you out when the project stabilizes.