Loan for a Reverse 1031 Exchange in RALEIGH NOW!

The Investor’s Advantage: Using a DSCR Loan for a Reverse 1031 Exchange

RALEIGH, NORTH CAROLINA – AUGUST 17, 2025: For the sophisticated real estate investor, a 1031 exchange is a powerful tax strategy. But what happens when the perfect replacement property appears before you’ve sold your current one? This situation, known as a reverse 1031 exchange, can be a significant financial challenge. Traditional financing can be too slow and rigid, leaving investors at a disadvantage.

This is where a DSCR loan for a reverse 1031 exchange becomes the ultimate strategic tool. This guide will provide a comprehensive overview of how this specialized financing works, with a special focus on how you can leverage it to grow your portfolio in the booming Raleigh, North Carolina, market.

DSCR Loan for a Reverse 1031 Exchange:

DSCR Loans: The Solution for a Reverse Exchange

A reverse 1031 exchange requires an investor to acquire the replacement property before selling the relinquished one. This creates a need for immediate capital. A DSCR loan is an asset-based loan that qualifies a borrower based on the subject property’s projected rental income, not their personal income or tax returns. This streamlined underwriting model makes it a perfect fit for the demands of a reverse 1031 exchange.

The DSCR (Debt Service Coverage Ratio) loan’s core value proposition is its speed and lack of personal income documentation. This bypasses the traditional mortgage process, which is often too slow for the strict 180-day deadline of an exchange.

• No Personal Income Verification: Lenders do not require personal tax returns, W-2s, or pay stubs. This allows you to scale your portfolio without the burden of extensive paperwork.
• Fast Underwriting: By focusing on the property’s financials, DSCR loans can close in as little as a few weeks, which is critical for meeting the tight deadlines of an exchange.
• Flexible Terms: These loans are designed for investors and can be a temporary solution while you sell your relinquished property or a long-term hold on a profitable asset.

DSCR Loan IQ Quiz!

Test your knowledge of Debt Service Coverage Ratio (DSCR) loans!

Start Quiz

Page 1 of 3

What is the primary factor a lender focuses on when approving a DSCR loan for an investment property? a) The borrower's personal debt-to-income (DTI) ratio b) The property's ability to generate enough income to cover its mortgage payments c) The borrower's credit score history over the past 10 years d) The total number of investment properties the borrower already owns

Page 2 of 3

If a property has a Net Operating Income (NOI) of $5,000 per month and its total monthly debt service (PITI) is $4,000, what is its DSCR? a) 0.8x b) 1.0x c) 1.25x d) 5.0x

Page 3 of 3

Which type of borrower most commonly benefits from using a DSCR loan? a) First-time homebuyers purchasing a primary residence b) Investors with a strong W-2 income and minimal tax deductions c) Self-employed individuals or those with complex income who want to avoid traditional income verification d) Homeowners looking to refinance their primary residence for a lower interest rate

Ready to send

Please provide your contact information to proceed.

Email Address *

First Name *

Consent *

Yes, I agree with the privacy policy and terms and conditions.

Submit

Current Market Insights & Requirements (as of August 17, 2025)

The DSCR loan market provides reliable options for investors. As of today, August 17, 2025, interest rates for DSCR loans on investment properties generally range from 7.25% to 9.00%. The final rate you receive will depend on several key factors:

• Credit Score: A minimum credit score of 660 is typically required, with the most competitive rates offered for scores of 720+.
• LTV (Loan-to-Value): A lower LTV, such as a 75% LTV, often leads to a more favorable interest rate.
• DSCR: A DSCR of 1.25 or higher indicates a strong cash flow and can reduce your interest rate.

Loan Requirements:

• Entity Ownership: The loan must be held in a business entity, such as an LLC.
• Reserves: Lenders will require you to demonstrate liquid reserves to cover a certain number of months of payments, usually 6-12 months.
• Property Type: DSCR loans are versatile and can be used to finance single-family rentals, multi-family properties (up to four units), and even short-term rentals.

Strategic Investing in Raleigh, NC

As a key pillar of the Research Triangle, Raleigh, North Carolina, is an ideal market for real estate investors. The city’s dynamic growth and strong economy provide a fertile ground for investors using a DSCR loan for a reverse 1031 exchange.

Key Economic Drivers:

• Research Triangle Park (RTP): A hub for technology and biotechnology, attracting a highly educated workforce.
• Major Universities: Institutions like NC State University contribute to a consistently robust rental market, particularly for student housing and young professional rentals.
• Job Growth: Raleigh’s low unemployment rate and strong job market make it a top destination for those seeking stability and opportunity.

Investment Scenarios:

• North Hills (27609): Use a DSCR loan to acquire a modern duplex in this upscale, mixed-use area. The high rental income will provide a strong DSCR, allowing you to close quickly while you sell your old asset.
• Downtown Raleigh (27601): As a major hub of revitalization, downtown offers opportunities for multi-family conversions. A DSCR loan provides the financial agility to secure a property here before someone else does.
• Cary (27511): Known for its family-friendly atmosphere and excellent schools, Cary provides a stable, long-term rental market. A DSCR loan allows you to acquire a property in this highly desirable area and hold it while you complete your exchange.

North Carolina Rental Property Quiz

This quiz is designed to help you understand the key laws and regulations for owning and managing a North Carolina rental property. By testing your knowledge, you can ensure legal compliance and protect your investment in the state.

Start Quiz

Page 1 of 5

What is the maximum security deposit a landlord can charge for a North Carolina rental property? A) The maximum security deposit is one month's rent. B) For a weekly tenancy, the deposit for a North Carolina rental property cannot exceed two weeks' rent, and for a monthly tenancy, it cannot exceed one and a half months' rent. C) The maximum security deposit is two months' rent. D) There is no limit on the security deposit amount.

Page 2 of 5

What is the legal timeframe for a landlord to return a security deposit for a North Carolina rental property? A) The landlord has 45 days to return the deposit after the tenant moves out. B) The landlord must return the deposit within 21 days. C) A landlord must return the deposit within 30 days of the tenancy's termination for a North Carolina rental property, or provide a written, itemized list of deductions. D) There is no specific timeframe, as long as it's a "reasonable" amount of time.

Page 3 of 5

What is the rule regarding late fees for rent for a North Carolina rental property? A) There is no legal limit on late fees, allowing landlords to set their own policies. B) The late fee for a North Carolina rental property cannot exceed $15 or 5% of the rent, whichever is greater, and a grace period of five days must be given. C) The late fee can be up to 10% of the monthly rent. D) Landlords are prohibited from charging late fees for any reason.

Page 4 of 5

What is the required notice period for a landlord to terminate a year-to-year lease for a North Carolina rental property? A) A landlord must provide 30 days' notice to terminate a year-to-year lease. B) A landlord must provide 14 days' notice to terminate a year-to-year lease. C) For a year-to-year lease on a North Carolina rental property, the landlord must give one month's notice before the end of the current lease term. D) The landlord is not required to give any notice.

Page 5 of 5

Which of the following describes a landlord's duty to maintain a North Carolina rental property? A) A landlord must ensure the property is in a "fit and habitable" condition, meeting all housing codes and making necessary repairs to maintain this standard. This is the legal obligation for a North Carolina rental property. B) The landlord is only responsible for major structural repairs, and the tenant is responsible for everything else. C) The landlord has no legal duty to make repairs. D) The landlord is only responsible for maintaining common areas, not individual units.

Ready to send

Please provide your contact information to proceed.

Email Address *

First Name *

Consent *

Yes, I agree with the privacy policy and terms and conditions.

Submit

GHC Funding: Your Partner in Portfolio Growth

Successfully executing a reverse 1031 exchange requires a lender who understands the strategy and can move at the speed of the market. GHC Funding is that lender. We specialize in providing investor-centric financing, ensuring you can meet your critical deadlines and build your portfolio with confidence.

Our expertise in DSCR loans is complemented by a full suite of financing options, including SBA 7a loans, SBA 504 Loans, Bridge Loans, and other forms of Alternative Real Estate Financing tailored to your specific investment needs.

Essential Resources for Raleigh Investors

• NC Real Estate Investors Association (NCREIA): A premier local organization for networking, education, and market insights.
• Raleigh Regional Association of REALTORS®: Provides local market data, events, and professional resources.
• Wake County Government: Offers information on property tax assessments, development projects, and local ordinances.

Frequently Asked Questions

Your Next Strategic Move in Raleigh

Don’t let the complexities of a reverse 1031 exchange limit your investment potential. A DSCR loan provides the financial agility to secure your next asset and continue building your portfolio.

Contact GHC Funding today to discuss your reverse 1031 exchange and get pre-qualified for a DSCR loan. We’re here to help you capitalize on the opportunities in the Raleigh market.

Call us now at 833-572-4327 or visit our website to learn more.

Your Next Strategic Move in Raleigh?

The Ultimate DSCR Loan for Rental Property Quiz

Are you looking to expand your real estate investment portfolio? A DSCR loan might be the perfect tool to help you achieve your goals without relying on traditional income documentation. Test your knowledge with this quiz to see if you're ready to master the intricacies of a DSCR loan for rental property.

Start Quiz

Page 1 of 5

What is the primary factor a lender considers when approving a DSCR loan for rental property? A) The borrower's personal income and debt-to-income (DTI) ratio. B) The borrower's credit score and employment history. C) The property's potential rental income compared to its monthly expenses, known as the Debt Service Coverage Ratio. This is the key metric for a DSCR loan for rental property eligibility and approval. D) The total value of the borrower's existing investment properties and personal savings.

Page 2 of 5

How does a DSCR loan for a rental property differ from a conventional mortgage for a personal residence? A) A conventional mortgage requires a DSCR calculation, whereas a DSCR loan for a rental property does not. B) A DSCR loan for a rental property primarily focuses on the property's cash flow, allowing investors to qualify without traditional income verification, unlike a conventional mortgage which is based on personal income and liabilities. C) A conventional mortgage has a higher interest rate and stricter requirements than a DSCR loan for a rental property. D) A DSCR loan for a rental property is only available for commercial properties, not residential rental properties.

Page 3 of 5

What is an ideal Debt Service Coverage Ratio (DSCR) for a lender when evaluating a DSCR loan for a rental property? A) A DSCR of 0.75, indicating the property generates 75% of the income needed to cover its debt service. B) A DSCR of 1.00, meaning the property's income exactly equals its debt service. C) A DSCR of 1.25 or higher, as this indicates the property's income is greater than its expenses, making it a strong candidate for a DSCR loan for a rental property and providing a buffer for unexpected costs. D) A DSCR of 2.00, which is the standard minimum for all investment properties, regardless of location or market conditions.

Page 4 of 5

Which of the following expenses are typically included in the calculation of the Debt Service Coverage Ratio for a DSCR loan for a rental property? A) The property's mortgage payment (principal and interest), property taxes, and insurance, which are the core components used to determine if the property can support the debt. B) The property's mortgage payment, property taxes, insurance, and the borrower's personal credit card debt. C) The property's monthly rental income and all utility bills, regardless of who pays them. D) Only the principal and interest payment of the loan, as other expenses are not considered in a DSCR loan for a rental property calculation.

Page 5 of 5

Who would most benefit from using a DSCR loan for a rental property? A) A first-time homebuyer with a W-2 salary and a high debt-to-income ratio, who is looking to purchase a primary residence. B) A seasoned real estate investor with multiple properties who wants to expand their portfolio without using personal income to qualify, making a DSCR loan for a rental property the ideal financing solution for their needs. C) Someone looking to finance a primary residence with a low down payment and a government-backed loan. D) An individual with a very low credit score who cannot qualify for any other type of loan.

Ready to send

Please provide your contact information to proceed.

Email Address *

First Name *

Consent *

Yes, I agree with the privacy policy and terms and conditions.

Submit

GHC Funding DSCR LOAN, SBA LOAN, BRIDGE LOAN

At GHC Funding, we are commercial finance specialists who guide real estate investors and business owners through the world of alternative lending. Our primary focus is on securing the right capital for your specific goals, whether that's a cash-flow-based DSCR loan for your rental portfolio, an SBA loan to grow your company, or a bridge loan to close a deal quickly and efficiently.

See Full Bio

DSCR LOAN SBA LOAN BRIDGE LOAN