DSCR Loan Closing Costs: What to Expect in 2026

DSCR Loan Closing Costs: What to Expect in 2026

You've found the perfect investment property, your DSCR ratio looks solid, and you're ready to move forward. But before you close, there's one more number you need to understand: closing costs.

DSCR closing costs are set file by file, and they can land above or below what a conventional mortgage would cost. Knowing what to expect—and how to minimize these expenses—can save you thousands of dollars and prevent last-minute surprises.

Total DSCR Closing Costs: The Big Picture

Closing costs on a DSCR loan depend on the lender's fees, the points you choose, the property's location and the title company. Your Loan Estimate (or term sheet) turns them into exact dollar figures for your loan.

Here's how they break down:

Cost Category	What sets it
Origination & points	The lender's fee, plus any discount points you choose to buy
Appraisal	Property type, size and location, plus the rent schedule
Title & escrow	Your state, the price or loan amount, and the title company
Prepaid items	Insurance, tax escrows and interest to month-end
Other fees	Credit report, flood certification, recording and similar items
Total	The sum on your Loan Estimate

Let's break down each category so you know exactly where your money goes.

Origination Fees and Points

This is often the largest lender-controlled category.

What Are Points?

A "point" equals 1% of your loan amount. Many DSCR lenders charge origination in points, and you can also choose to pay discount points to lower your rate. Your Loan Estimate shows each one as a percentage and in dollars, so check:

• How many origination points the lender charges
• Whether any discount points are built into the quoted rate

What Shapes the Points on a DSCR Quote

Origination on a DSCR loan is not automatically higher or lower than on a conventional mortgage. Each lender sets it for the specific file, and a few things can move it either way:

1. Risk-based pricing - The investor prices the property, leverage and credit profile together
2. Non-QM execution - These loans go to private investors rather than Fannie Mae or Freddie Mac, so each investor's fee schedule applies
3. Rate-versus-points trade-off - Many quotes let you pay more up front for a lower rate, or less up front for a higher one
4. Rental income review - Some files need extra work, such as a rent schedule or short-term rental data

The only reliable comparison is two Loan Estimates or term sheets for the same property and loan amount, read line by line.

Origination Fee vs. Discount Points

Don't confuse the two:

• Origination fee: What the lender charges to process your loan
• Discount points: Optional payment to buy down your interest rate

You might see a quote that combines an origination point with a buydown point. Only the buydown point is buying you a lower rate, so ask the lender to separate them.

Appraisal Costs

Every DSCR loan requires an appraisal to determine property value and rental income. The fee depends on the property type, size, location and complexity: multi-family, large, rural and unusual properties generally cost more to appraise.

Rent Schedule (Form 1007)

DSCR loans generally require the appraiser to complete a rent schedule showing:

• Current lease rent (if applicable)
• Market rent opinion
• Comparable rental analysis

It is often included in the appraisal fee but is sometimes charged separately; your Loan Estimate shows which.

Title and Escrow Fees

These fees pay for the legal transfer of property ownership.

Title Insurance

Title insurance protects against ownership disputes. There are two policies:

• Lender's policy (required): Protects the lender's interest
• Owner's policy (optional but recommended): Protects your investment

Premiums vary significantly by state, and some states regulate them. Ask the title company for a quote on your property.

Escrow and Settlement Fees

The escrow or settlement company handles:

• Holding earnest money
• Coordinating document signing
• Disbursing funds at closing

Who pays which share is set by local custom and your contract.

Additional Title Fees

• Title search
• Recording fees
• Notary fees
• Wire transfer fees

Prepaid Items and Escrow Deposits

These aren't fees—they're advance payments for recurring costs.

Property Insurance (Prepaid)

Lenders typically require the first year of the landlord policy to be paid at or before closing. The premium depends on the property, location and coverage, so get a quote early.

Property Taxes (Prepaid)

Depending on when you close and when taxes are due, you may prepay:

• Prorated taxes from closing to the next due date
• An initial deposit into the tax escrow account

Insurance and Tax Escrow Deposits

If your loan has an escrow account, the lender collects an initial deposit so funds are available when bills come due. The amount depends on your tax and insurance due dates and the escrow rules for your loan.

Prepaid Interest

You'll pay interest from your closing date to the end of that month:

• Close early in the month = more days of prepaid interest
• Close late in the month = fewer days of prepaid interest

Pro tip: Closing late in the month reduces prepaid interest, though it doesn't change the total interest you pay over the loan.

Other Common DSCR Closing Costs

• Credit report: even though DSCR loans don't verify income, lenders still pull credit
• Flood certification: determines if the property is in a flood zone
• Survey: not always required, but can identify boundaries and encroachments
• HOA documentation: resale certificate, documentation package or estoppel letter, if the property has an HOA
• Attorney fees: in states where an attorney must handle certain closing functions

DSCR vs. Conventional Closing Costs Compared

Cost Item	DSCR Loan	Conventional
Origination & points	Set by the lender and investor for your file	Set by the lender for your file
Appraisal	Usually includes a rent schedule, which can add to the fee	Rent schedule only when rental income is used
Title/Escrow	Set by the title company and property location	Set by the title company and property location
Prepaids	Taxes, insurance and interest for your closing date	Taxes, insurance and interest for your closing date

Neither loan type is reliably cheaper to close. Ask each lender for a Loan Estimate or term sheet on the same property and loan amount, then compare origination, points and third-party fees line by line.

7 Strategies to Reduce DSCR Closing Costs

1. Compare Multiple Lenders

DSCR pricing varies between lenders and programs. Get quotes on the same scenario and compare:

• Interest rates
• Origination points
• Other lender fees
• Total cost at different hold periods

2. Negotiate Origination Fees

Don't assume fees are fixed. You can often ask about:

• Lower origination points
• Waived or reduced lender fees
• Lender credits in exchange for a higher rate

3. Request a Lender Credit

Some lenders offer credits that offset closing costs in exchange for a higher interest rate:

• Accept a higher rate → receive a credit toward closing costs
• Can make sense if you plan to refinance or sell sooner

4. Ask the Seller to Contribute

Many programs allow the seller to pay part of your closing costs, up to a cap the program sets:

• Works best in buyer's markets
• Include it in your purchase offer
• More likely on properties that have sat on the market

5. Choose a No-Points Option

Some lenders offer zero-point loans:

• Higher interest rate than a points option
• Lower upfront costs
• Better if you won't hold long-term

6. Shop Title Insurance

Title insurance pricing isn't always fixed:

• Get quotes from multiple title companies where your state allows it
• Ask about "reissue rates" if the property was recently insured
• Some states regulate rates

7. Close Late in the Month

Reduce prepaid interest by closing near the end of the month instead of early in the month.

Sample DSCR Closing Cost Worksheet

Use this checklist to read your Loan Estimate line by line. Every dollar figure comes from your own lender and title company:

Lender Fees

• Origination (and any points)
• Processing fee
• Underwriting fee
• Credit report
• Flood certification
• Lender total

Third-Party Fees

• Appraisal
• Title insurance (lender's policy)
• Title insurance (owner's policy)
• Escrow/settlement fee
• Title search
• Recording fees
• Notary
• Survey (if required)
• Third-party total

Prepaid Items

• Insurance (first-year premium)
• Property tax escrow deposit
• Insurance escrow deposit
• Prepaid interest (daily interest from closing to month-end)
• Prepaids total

Grand total: add the three subtotals and compare the result across Loan Estimates for the same scenario

What's NOT Included in Closing Costs

Don't forget these additional amounts:

Down Payment

Your down payment, set by the program's maximum loan-to-value, is separate from closing costs, so it comes on top of everything above.

Cash due at closing = Down payment + Closing costs + Prepaid items and escrow deposits

Cash Reserves (Assets That Remain After Closing)

Reserves are not paid at closing. They are a separate qualification requirement: many DSCR programs want to see a set number of months of PITIA still sitting in your accounts after the cash due at closing has been paid. To size them:

• Take the full monthly PITIA from your quote
• Multiply by the number of months your program requires

This isn't a cost. The money stays yours, but it has to be verifiable on top of your cash due at closing.

Renovation or Repairs

If the property needs work, budget separately for:

• Immediate repairs
• Property preparation
• Furnishing (for short-term rentals)

Closing Costs for Different DSCR Loan Types

Purchase DSCR Loans

• Full closing costs as outlined above
• Down payment required
• Title insurance based on the purchase

Cash-Out Refinance DSCR Loans

Similar costs with some differences:

• A lender's title policy for the refinance
• No seller negotiations
• Potentially closer appraisal scrutiny
• Check our guide on DSCR cash-out refinancing

Rate-and-Term Refinance

• May qualify for a "reissue rate" on title
• No cash-out pricing adjustment
• Simpler underwriting

Red Flags in DSCR Closing Cost Estimates

Watch for these warning signs:

Unusually Low Estimates

If one lender's estimate is dramatically lower, it might:

• Be missing required fees
• Plan to add fees later
• Have costs built into a higher rate

Fees You Don't Understand

Question these if they seem high:

• "Administrative fee"
• "Document preparation fee"
• "Rate lock fee"
• "Commitment fee"

Vague Line Items

Ask for specifics if you see lines like "Other fees" or "Miscellaneous" without a breakdown.

Timeline: When Do You Pay Closing Costs?

At Application

• Sometimes a credit report fee
• Sometimes an appraisal deposit

Before Closing

• Appraisal balance (if not collected upfront)
• Home inspection (optional but recommended)

At Closing

• All remaining fees
• Bring certified funds or wire as instructed (always verify wiring instructions by phone)

Ongoing (Not Closing Costs, But Important)

• Monthly mortgage payments begin on the date in your note
• Property taxes (if not escrowed)
• Insurance renewals

Can You Finance DSCR Closing Costs?

On a purchase, closing costs are generally paid at settlement. However:

• Lender credits can offset costs (in exchange for a higher rate)
• Seller credits can cover costs (negotiated in the contract, within program limits)
• Cash-out refinance proceeds can absorb costs (if there is enough equity)

Final Thoughts: Budgeting for Your DSCR Loan

DSCR closing costs can land above or below a conventional quote, and the benefits—no income docs, LLC closings on many programs, room to grow beyond conventional limits—often matter more than the difference.

Request a detailed Loan Estimate early in the process, compare it with at least one other quote on the same scenario, and ask about any fee you don't understand.

Ready to Get Started?

See what DSCR loan options fit your scenario and get a clear picture of your potential costs. Our 60-second quiz matches you with programs worth pricing.

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Zac Cook is a licensed mortgage loan originator (NMLS #2111496). This content is for informational purposes only and does not constitute financial advice. Loan approval is subject to credit and property qualification. Equal Housing Lender.