The long-term rental loan has been the hottest loan program for the private mortgage industry in 2021. Although private lending is mostly for short terms less than two years, many private lenders now offer terms up to 30 years for residential rental properties. It’s also known as DSCR financing since the Debt Service Coverage Ratio is the primary qualification. The private lending companies offering these fixed rate loans have fueled an explosion of rental home investing.
While attending the IMN Single Family Rental Conference in December 2022, I interviewed Jeffrey Tesch, CEO of RCN Capital, to get more insights about how the interest rates for these rental loans are determined, and what the typical rates are. RCN is one of the largest private lending companies in the country, and one of the top originators of long-term rental loans.
Interest Rate Range for 30-Year Rental Loans in 2021
- 3.75% to 5.0%
Factors That Determine the Interest Rate for Rental Loans
- Debt Service Coverage Ratio
- Borrower’s Credit Score
Long-term rental loan rates move similarly to consumer mortgages since the majority of them are sold to the secondary market and securitized. While the interest rates for DSCR rental loans for RCN Capital and other lenders range from 3.75% to 5% as of December 2021, many people in the private lending industry expect the Federal Reserve to increase the Fed Funds Rate in early 2022.
How to Find Direct Lenders for Long-Term Rental Loans
If you’re seeking long-term financing for a residential rental property, use our website as a resource. There is no fee to search, and we have a select group of reputable private lending companies listed. There are two options for using our platform.
Option 1: Browse Lenders
Search on our site for direct lenders. All lenders have a very detailed profile with information about their lending guidelines, rates, fees and much more. Make contact with each out directly by email, phone call, or visit their websites. First select a loan type, then enter the state where the property is located.
Option 2: Create a Loan Request
Fill out a questionnaire with information about your financing needs. You can then browse lenders and invite a few of them to view your deal. Or ask us for recommendations; we’ll review it and invite a few select lenders that we feel may be a good fit.