Options for Refinancing a Rental Property When My Bank Said No
PHILADELPHIA, PENNSYLVANIA – AUGUST 17, 2025: As a real estate investor, you know that your journey is filled with strategic moves and, occasionally, frustrating roadblocks. You’ve identified an opportunity to optimize your portfolio—perhaps by lowering a high-interest rate or pulling cash out to fund a new acquisition—and you’ve approached your traditional bank with confidence. But then you hear those three deflating words: “The bank said no.” 🛑
This is not the end of the road. It’s a clear signal that it’s time to pivot and explore a different, more flexible type of financing designed specifically for investors. If you’re looking for options for refinancing a rental property when your bank said no, the answer likely lies in a DSCR (Debt Service Coverage Ratio) loan.
Refinancing a Rental Property When My Bank Said No:
- Why Your Bank Said No (And Why That's Okay)
- Why GHC Funding is Your Go-To Lender in Philadelphia
- Helpful External Resources for Philadelphia Investors
- Frequently Asked Questions (Q&A)
- Q1: What if my rental property isn't cash-flowing?
- Q2: What's the benefit of a DSCR loan over a conventional loan?
- Q3: How is my credit score factored into a DSCR loan?
- Q4: Can I use a DSCR loan for a fix-and-flip property?
- Q5: Can a DSCR loan be used for a multi-unit property?
- Q6: Can I use the cash from a refinance to pay off other debts?
- Q7: Will a DSCR loan be a permanent solution?
- Don't Let a 'No' Stop Your Progress
Why Your Bank Said No (And Why That’s Okay)
Traditional banks operate under a rigid set of rules. They require extensive documentation, including personal income statements, tax returns, and a low debt-to-income (DTI) ratio. For many investors, especially those with multiple properties or complex income streams, this can be a major problem. Your bank’s underwriting model is designed for a W-2 employee, not a savvy investor.
A DSCR loan completely sidesteps this process. It’s a type of non-qualified mortgage (non-QM) where the focus is on the property’s ability to generate income, not your personal finances. This is a game-changer for anyone who has been turned away by a conventional lender.
How It Works
The Debt Service Coverage Ratio (DSCR) is the core of this loan product. It’s a simple calculation: the property’s gross rental income is divided by its total debt service (the new PITI payment—Principal, Interest, Taxes, and Insurance). A DSCR of 1.25, for example, means the property generates 25% more income than is needed to cover its expenses. As long as your property has a positive DSCR (usually greater than 1.0), you’re on the right track.
Current Market Insights & Rates 📊
As of August 17, 2025, interest rates for DSCR loans on investment properties are competitive, though typically a bit higher than conventional loans due to their flexible nature. You can generally expect a range of 6.5% to 8.5%. The specific rate you get will depend on several factors:
- Credit Score: A higher score will always secure a better rate. Most DSCR lenders work with credit scores as low as 620, but a score of 700+ will significantly improve your terms.
- Loan-to-Value (LTV): The more equity you have, the lower your rate. Lower LTVs mean less risk for the lender.
- Property Type: A single-family home or a multi-unit property like a duplex, triplex, or fourplex is often viewed favorably.
- DSCR: A higher DSCR demonstrates a healthier, more profitable asset, which lenders reward with more favorable rates.
Key Requirements for a DSCR Loan
The qualifications are designed to be as straightforward as possible for the investor:
- No Personal Income Verification: You will not need to provide tax returns, W-2s, or pay stubs.
- A Positive Debt Service Coverage Ratio (DSCR): Lenders generally look for a DSCR of 1.2 or higher.
- Sufficient Equity: A cash-out refinance will require you to have enough equity in the property to meet the lender’s LTV requirements, typically around 75%-80%.
- Business Entity: DSCR loans are for investment properties, and many lenders require the loan to be in the name of an LLC or other business entity.
Why GHC Funding is Your Go-To Lender in Philadelphia
When your bank says no, you need a lender who says yes. That lender is GHC Funding. We specialize in providing tailored financing solutions to real estate investors, and we are not bound by the rigid, one-size-fits-all approach of traditional banks.
Our team at GHC Funding has a deep understanding of the unique real estate market in Philadelphia, PA. We know the value of a meticulously renovated brownstone in Rittenhouse Square (19103), the rental demand for a rowhouse in the booming Fishtown neighborhood (19125), or the consistent cash flow of a multifamily unit in South Philly (19147). Our expertise in a range of loan products, including DSCR Loans, SBA 7a loans, SBA 504 Loans, Bridge Loans, and Alternative Real Estate Financing, means we can find the perfect solution for your specific needs, no matter how complex.
Whether you’re looking to pull equity from an investment property to fix up another property in the Northern Liberties area or to fund a new acquisition near the historic Independence Hall, our streamlined process and flexible underwriting can make it happen. GHC Funding’s focus on your property’s cash flow, not your personal income, is the key to unlocking the capital you need to scale your business and turn that “no” into a strategic “yes.”
Helpful External Resources for Philadelphia Investors
Staying informed is critical for success. Here are some high-quality, relevant resources for investors in the Philadelphia area:
- Philadelphia Real Estate Investors Association (PREIA): A valuable local community that provides networking, education, and resources for real estate investors. https://www.philadelphiareia.com/
- City of Philadelphia Housing and Community Development: Provides information on city-level housing policies, programs, and data that can impact your investment strategy. https://www.phila.gov/departments/division-of-housing-and-community-development/
- Newmark Philadelphia Market Reports: A great resource for detailed commercial and residential market reports, including trends in supply, demand, and pricing. https://www.nmrk.com/insights/market-report/philadelphia-market-reports
- Pennsylvania Housing Finance Agency (PHFA): A state-level agency that provides resources and financing for housing and community development projects. https://www.phfa.org/
- The Greater Philadelphia Association of REALTORS® (GPAR): Offers market data and professional resources for investors and real estate professionals. https://www.gpar.org/
Frequently Asked Questions (Q&A)
Q1: What if my rental property isn’t cash-flowing?
Most DSCR lenders require the property to have a positive cash flow with a DSCR of at least 1.0. However, some lenders offer “no-DSCR” or “DSCR-lite” options, which may come with higher rates but can be a viable path for properties that are not yet cash-flowing.
Q2: What’s the benefit of a DSCR loan over a conventional loan?
The primary benefit is qualification based on the property’s income, not your personal income. This allows you to scale your portfolio without hitting a personal DTI limit and frees up your personal credit for other financing needs.
Q3: How is my credit score factored into a DSCR loan?
Your credit score does not determine whether you are approved, but it significantly influences your interest rate and loan terms. A higher credit score will result in a lower interest rate, so it’s still beneficial to have a good score.
Q4: Can I use a DSCR loan for a fix-and-flip property?
DSCR loans are primarily for long-term rental properties. For fix-and-flip projects, a Bridge Loan is a more suitable option. GHC Funding provides these and other alternative financing solutions.
Q5: Can a DSCR loan be used for a multi-unit property?
Yes, a DSCR loan is an excellent tool for multi-unit properties like duplexes, triplexes, and fourplexes. The combined rental income from all units can help you qualify for a larger loan amount.
Q6: Can I use the cash from a refinance to pay off other debts?
Yes, the cash from a refinance can be used for any business purpose. This can include paying off high-interest debt, funding renovations, or using it as a down payment for your next investment.
Q7: Will a DSCR loan be a permanent solution?
DSCR loans often have a 30-year term, providing a long-term solution. However, some investors may choose to refinance a DSCR loan into another product later on if interest rates drop or their financial situation changes.
Don’t Let a ‘No’ Stop Your Progress
Being denied by a traditional bank is not a sign of failure; it’s an opportunity to find a better, more investor-centric solution. You have worked hard to build equity in your rental property, and you deserve a lending partner who recognizes its value.
If you are a real estate investor in Philadelphia, PA, and your bank said no, it’s time to talk to GHC Funding. We are experts in providing flexible financing solutions that traditional lenders simply can’t match.
Take the first step toward a more secure and profitable portfolio. Call GHC Funding at 833-572-4327 or visit our website at www.ghcfunding.com to explore your refinancing options today.
