A "point" equals 1% of your loan amount. DSCR lenders commonly charge 1-2 points at closing: 1 point on $300,000 = $3,000 2 points on $300,000 = $6,000

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 loans typically have higher closing costs than conventional mortgages. 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

Plan for closing costs between 2% and 5% of your loan amount. On a $300,000 DSCR loan, that's $6,000 to $15,000.

Here's how that typically breaks down:

Cost Category	Typical Range	Example ($300K loan)
Origination & Points	1-2%	$3,000-$6,000
Appraisal	$500-$1,500	$750
Title & Escrow	0.5-1%	$1,500-$3,000
Prepaid Items	Varies	$2,000-$4,000
Other Fees	$500-$1,500	$1,000
Total	2-5%	$8,250-$15,750

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

Origination Fees and Points

This is typically the largest closing cost category for DSCR loans.

What Are Points?

A "point" equals 1% of your loan amount. DSCR lenders commonly charge 1-2 points at closing:

1 point on $300,000 = $3,000
2 points on $300,000 = $6,000

Why DSCR Loans Charge More Points

DSCR loans have higher origination fees than conventional mortgages because:

Higher risk profile - Investment properties have higher default rates
Less competition - Fewer lenders means less pricing pressure
Non-QM status - Can't be sold to Fannie/Freddie, so lenders keep the risk
Specialized underwriting - Evaluating rental income requires expertise

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 with "1 point origination + 1 point buydown." That's 2 total points, but only one is for the lower rate.

Appraisal Costs

Every DSCR loan requires an appraisal to determine property value and rental income.

Standard Appraisal: $500-$750

A basic single-family appraisal includes:

Property inspection and photos
Comparable sales analysis
Value opinion
Market rent opinion (Form 1007)

When Appraisals Cost More

Expect higher fees for:

Multi-family properties (2-4 units): $750-$1,200
Large properties (3,000+ sq ft): $650-$900
Rural locations: $600-$1,000
Complex properties: $800-$1,500

Rent Schedule (Form 1007)

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

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

This is usually included in the appraisal fee but sometimes charged separately ($75-$150).

Title and Escrow Fees

These fees pay for the legal transfer of property ownership.

Title Insurance: 0.5-1% of Purchase Price

Title insurance protects against ownership disputes. You'll pay for two policies:

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

Costs vary significantly by state. For a $400,000 property:

State	Approximate Title Insurance
Texas	$2,800-$3,200
Florida	$2,000-$2,400
California	$1,800-$2,200
Ohio	$1,200-$1,600

Escrow Fees: $500-$1,500

The escrow company handles:

Holding earnest money
Coordinating document signing
Disbursing funds at closing

Fees are often split between buyer and seller.

Additional Title Fees

Title search: $150-$400
Recording fees: $50-$200
Notary fees: $50-$150
Wire transfer fee: $25-$75

Prepaid Items and Escrow Reserves

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

Property Insurance (Prepaid)

Lenders require your first year of insurance paid at closing:

Standard rental property: $1,200-$2,400/year
Multi-family: $1,500-$3,500/year
Short-term rental: $1,800-$4,000/year

Property Taxes (Prepaid)

Depending on when you close, you'll prepay:

Prorated taxes from closing to next due date
Sometimes 2-6 months of tax reserves

Example: Closing in October with taxes due in January might require 3+ months prepaid.

Insurance and Tax Escrow Reserves

Many lenders require reserve accounts:

2-6 months of property taxes
2-3 months of insurance

These reserves ensure funds are available when bills come due.

Prepaid Interest

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

Close on the 5th = ~25 days prepaid interest
Close on the 25th = ~5 days prepaid interest

Pro tip: Closing late in the month minimizes prepaid interest.

Other Common DSCR Closing Costs

Credit Report: $30-$75

Even though DSCR loans don't verify income, lenders still pull credit.

Flood Certification: $15-$30

Determines if the property is in a flood zone.

Survey: $350-$600

Not always required, but recommended to identify property boundaries and encroachments.

HOA Documentation: $150-$500

If the property has an HOA, you'll pay for:

Resale certificate
HOA documentation package
Estoppel letter

Attorney Fees (Some States): $500-$1,500

In "attorney states" like New York, Georgia, and Massachusetts, a lawyer must handle certain closing functions.

DSCR vs. Conventional Closing Costs Compared

Cost Item	DSCR Loan	Conventional
Origination	1-2%	0.5-1%
Appraisal	$500-$1,500	$400-$750
Title/Escrow	Similar	Similar
Prepaids	Similar	Similar
Total	2-5%	1.5-3%

The main difference is origination fees. DSCR loans cost more upfront but save time and documentation hassle.

7 Strategies to Reduce DSCR Closing Costs

1. Compare Multiple Lenders

DSCR pricing varies significantly. Get quotes from at least 3-4 lenders 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 negotiate:

Lower origination points (especially with strong credit)
Waived junk fees
Lender credits for higher rates

3. Request a Lender Credit

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

Accept 8.25% instead of 8% → Get $3,000 lender credit
Makes sense if you plan to refinance or sell within a few years

4. Ask the Seller to Contribute

Sellers can pay closing costs on investment properties, typically up to 2-6% of purchase price:

Works best in buyer's markets
Include in your purchase offer
Common for properties that have sat on market

5. Choose a No-Points Option

Some lenders offer zero-point loans:

Higher interest rate (0.25-0.50% more)
Lower upfront costs
Better if you won't hold long-term

6. Shop Title Insurance

Title insurance rates aren't always fixed:

Get quotes from multiple title companies
Ask about "reissue rates" if seller recently refinanced
Some states have regulated rates (no shopping)

7. Close Late in the Month

Minimize prepaid interest by closing on the 25th-31st instead of early in the month.

Sample DSCR Closing Cost Worksheet

Here's a realistic breakdown for a $350,000 DSCR loan on a $450,000 property:

Lender Fees

Origination (1.5 points): $5,250
Processing fee: $595
Underwriting fee: $895
Credit report: $45
Flood certification: $20
Lender total: $6,805

Third-Party Fees

Appraisal: $650
Title insurance (lender's policy): $875
Title insurance (owner's policy): $1,400
Escrow/settlement fee: $750
Title search: $200
Recording fees: $125
Notary: $75
Survey: $450
Third-party total: $4,525

Prepaid Items

Homeowner's insurance (12 months): $1,800
Property taxes (3 months escrow): $1,125
Insurance escrow (2 months): $300
Prepaid interest (15 days @ $76/day): $1,140
Prepaids total: $4,365

Grand Total: $15,695 (4.5% of loan amount)

What's NOT Included in Closing Costs

Don't forget these additional expenses:

Down Payment

Your 20-25% down payment is separate from closing costs. On a $450,000 property:

20% down: $90,000
25% down: $112,500

Total cash needed = Down payment + Closing costs + Reserves

Cash Reserves

Lenders require 6-12 months of PITIA in reserves after closing:

Monthly PITIA: $2,800
6-month reserve: $16,800

This isn't a cost—it's money you keep—but you need it available.

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 for full purchase price

Cash-Out Refinance DSCR Loans

Similar costs with some differences:

No purchase title insurance (refi policy only)
No seller negotiations
Potentially higher appraisal scrutiny
Check our guide on DSCR cash-out refinancing

Rate-and-Term Refinance

Lower costs (no cash-out premium)
May qualify for "reissue rate" on title
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, they might:

Be missing required fees
Plan to add fees later
Have hidden costs in higher rate

Excessive "Junk Fees"

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:

"Other fees: $1,500"
"Miscellaneous: $750"

Timeline: When Do You Pay Closing Costs?

At Application

Credit report fee: $30-$75
Sometimes appraisal deposit: $400-$600

Before Closing

Appraisal balance (if not collected upfront)
Home inspection (optional but recommended): $300-$500

At Closing

All remaining fees
Bring certified check or wire funds

Ongoing (Not Closing Costs, But Important)

Monthly mortgage payment starts 30+ days after closing
Property taxes (if not escrowed)
Insurance renewals

Can You Finance DSCR Closing Costs?

Generally, no. DSCR lenders require closing costs paid at settlement. However:

Lender credits can offset costs (higher rate)
Seller credits can cover costs (negotiated in contract)
Cash-out refinance can include costs in loan (if enough equity)

Final Thoughts: Budgeting for Your DSCR Loan

DSCR loan closing costs are higher than conventional mortgages, but the benefits—no income docs, LLC ownership, unlimited properties—often outweigh the extra expense.

Budget rule of thumb:

Conservative: 5% of loan amount for closing costs
Typical: 3-4% of loan amount
Best case: 2-3% with negotiation and credits

Always request a detailed Loan Estimate early in the process and ask questions about any fees you don't understand.

Ready to Get Started?

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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.