DSCR Loan Closing Process: Timeline and What to Expect

A detailed walkthrough of the DSCR loan closing process from conditional approval to keys in hand. Know the timeline, costs, and what happens at each stage.

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DSCR Loan Closing Process: Timeline and What to Expect

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You’ve found the property, your offer was accepted, and your DSCR Loan Financing is moving forward. Now comes the part that makes most first-time investors nervous: closing. The DSCR loan closing process involves multiple parties, specific timelines, and costs that you need to understand before you get to the finish line.

Here’s exactly what happens between going under contract and getting the keys, so nothing catches you off guard.

Overall Closing Timeline

A typical DSCR loan closes in 21 to 45 days from the time you go under contract. The most common timeline is around 30 days, but several factors affect your speed:

Property type: Single-family homes close faster than multifamily properties
Appraisal turnaround: This is usually the biggest variable, ranging from 5 to 14 days depending on the market
Title search complexity: Clean title histories close quickly; properties with liens or encumbrances take longer
Your responsiveness: How fast you return signed documents and satisfy conditions directly impacts your timeline

If you got pre-approved for your DSCR loan before finding the property, you’ve already shaved 5 to 10 days off this timeline since your borrower profile is already verified.

Run your numbers through our DSCR Loan Calculator to see if your property qualifies.

Phase-by-Phase Breakdown

Phase 1: Application and Document Submission (Days 1-3)

Once you’re under contract, you formally submit your loan application along with the purchase contract and property details. If you’re already pre-approved, this phase is mostly about providing the specific property information to your lender. For a full walkthrough of the application itself, see our guide on how to apply for a DSCR loan.

Your lender will need:

Fully executed purchase agreement
Property address and legal description
Expected rental income documentation (existing leases or market rent analysis)
Proof of earnest money deposit
Updated bank statements (if more than 30 days old from pre-approval)

Phase 2: Appraisal Ordering (Days 3-7)

The lender orders a property appraisal from a licensed, independent appraiser. This is one of the most critical steps in a DSCR loan because the appraiser determines two things:

Fair market value of the property (which affects your loan-to-value ratio)
Market rent analysis (which determines your DSCR ratio)

The appraisal typically costs $400 to $800 for a single-family property and $800 to $1,500 for a small multifamily. You pay this upfront, and it’s non-refundable even if the deal falls through.

Appraisal turnaround varies by market. In busy metros like Phoenix or Atlanta, expect 7 to 14 days. In smaller markets, you might get it back in 5 to 7 days.

What can go wrong: The appraised value comes in lower than the purchase price, reducing your loan amount. Or the market rent analysis shows rents too low to meet the minimum DSCR ratio (typically 1.0 to 1.25). Either scenario requires renegotiation with the seller or bringing more cash to closing.

Phase 3: Title Search and Insurance (Days 3-10)

Running in parallel with the appraisal, the title company conducts a thorough search of the property’s ownership history. They’re looking for:

Outstanding liens (tax liens, mechanic’s liens, judgment liens)
Easements or encroachments
Unresolved ownership claims
HOA violations or unpaid assessments
Any defects in the chain of title

Once the title search comes back clean, the title company issues a title commitment, which is essentially a promise to insure the property’s title at closing. You’ll purchase a lender’s title insurance policy (required) and optionally an owner’s title insurance policy (strongly recommended).

Lender’s title insurance protects the lender’s interest in the property. Cost is typically $500 to $1,500 depending on the loan amount and state.

Owner’s title insurance protects your equity. It’s a one-time fee at closing, usually $500 to $2,000. Skip this at your own risk. A title defect discovered years later could cost you the entire property.

Phase 4: Insurance Binding (Days 5-15)

You need to secure property insurance (hazard insurance) before closing. The lender requires proof that the property is insured for at least the loan amount. You’ll need:

Hazard/property insurance covering fire, wind, and other covered perils
Flood insurance if the property is in a FEMA-designated flood zone
Liability insurance (typically included in your property insurance policy)

For a single-family rental, expect to pay $1,200 to $3,000 annually for property insurance, depending on the location, property value, and coverage amounts. Flood insurance, if required, adds $500 to $3,000+ annually.

Get quotes from at least three insurance providers. Your insurance agent needs to list the lender as a mortgagee on the policy and provide a binder (proof of insurance) to the title company before closing.

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Phase 5: Underwriting Conditions (Days 10-25)

This is where underwriting digs into every detail. After receiving the appraisal, title commitment, and insurance binder, the underwriter reviews everything and issues a list of conditions that must be cleared before the loan can close.

Common DSCR loan underwriting conditions include:

Verification of reserves (updated bank statements showing sufficient funds for down payment, closing costs, and required reserves)
Entity verification (confirmation your LLC is in good standing)
Lease review (if existing tenants, the underwriter reviews current lease agreements)
Insurance confirmation (proper coverage amounts and mortgagee clause)
Appraisal clarifications (sometimes the underwriter asks the appraiser follow-up questions about comparable properties or condition ratings)
Property condition requirements (if the appraiser noted deferred maintenance, the underwriter may require repairs before closing)

Respond to conditions quickly. Every day you delay extends your closing timeline. The best practice is to respond to all conditions within 24 to 48 hours.

Phase 6: Clear to Close (Days 20-35)

Once all underwriting conditions are satisfied, you receive the magic words: clear to close (CTC). This means the loan is fully approved and the lender is ready to fund.

At this point, the closing team (typically the title company or closing attorney, depending on the state) prepares the closing documents. This includes the mortgage note, deed of trust, settlement statement, and all required disclosures.

Phase 7: Closing Disclosure (3 Business Days Before Closing)

Federal law requires that you receive a Closing Disclosure (CD) at least three business days before your closing date. This document details every cost, credit, and adjustment in the transaction.

Review the CD carefully and compare it to the Loan Estimate you received at the beginning of the process. Key items to verify:

Loan amount and interest rate match what was agreed upon
Monthly payment breakdown (principal, interest, taxes, insurance)
All closing costs are accurately reflected
Prepayment penalty terms (if applicable)
Cash due at closing matches your expectations

If there are material changes to the CD after it’s issued, the three-day clock resets, which can delay your closing.

Phase 8: Closing Day (Signing)

On closing day, you sign the final documents. Depending on your state and situation, this can happen in person at the title company or remotely.

In-person closing: You sit down with a closing agent at the title company or attorney’s office. Plan for 45 minutes to an hour of signing.

Remote closing / e-signing: Many states now allow remote online notarization (RON), which lets you sign everything digitally via video call. This is especially useful for out-of-state investors. Your lender and title company can confirm whether your state and county support RON closings.

Power of attorney: If you can’t attend in person and RON isn’t available, you can sometimes grant power of attorney to a trusted representative to sign on your behalf. This requires advance coordination with the lender and title company.

Phase 9: Funding and Recording (1-3 Days After Signing)

After all documents are signed, the lender wires the loan proceeds to the title company. The title company disburses funds to the seller, pays off any existing liens, distributes closing costs, and records the deed and mortgage with the county.

In some states (known as “table funding” states), funding happens simultaneously with signing. In others, there’s a 24 to 72-hour gap between signing and funding.

You officially own the property once the deed is recorded with the county. The title company will send you a copy of the recorded deed, which may take a few weeks to arrive.

Typical Closing Costs Breakdown

DSCR loan closing costs typically run 2% to 5% of the loan amount. On a $250,000 loan, expect $5,000 to $12,500 in total closing costs. Here’s how that breaks down:

Lender Fees

Fee	Typical Cost
Origination fee (1-2 points)	$2,500 - $5,000
Underwriting fee	$500 - $1,000
Processing fee	$300 - $750
Credit report	$50 - $100
Flood certification	$15 - $25

Third-Party Fees

Fee	Typical Cost
Appraisal	$400 - $1,500
Title search	$200 - $500
Lender’s title insurance	$500 - $1,500
Owner’s title insurance	$500 - $2,000
Closing/settlement fee	$300 - $800
Recording fees	$100 - $300
Survey (if required)	$300 - $600

Prepaid Items and Escrow

Item	Typical Cost
Prepaid interest (per diem x days to month end)	$200 - $1,000
Property insurance (first year)	$1,200 - $3,000
Property tax escrow (2-4 months)	$500 - $2,000
Insurance escrow (2-3 months)	$200 - $750

Real Example

For a $300,000 purchase with a $225,000 DSCR loan (25% down), here’s what realistic closing costs look like:

Origination (1.5 points): $3,375
Underwriting fee: $750
Processing fee: $500
Appraisal: $550
Title search and insurance: $1,800
Closing fee: $500
Recording: $175
Prepaid interest (15 days): $575
Property insurance (year 1): $2,100
Tax escrow (3 months): $1,125
Insurance escrow (2 months): $350

Total closing costs: approximately $11,800

Combined with the $75,000 down payment, total cash needed at closing is approximately $86,800.

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Closing in an LLC Name

Most DSCR loans close in the name of your LLC, not your personal name. This adds a few requirements:

Your LLC must be in good standing with the state where it’s registered
The Operating Agreement must authorize the signing member to execute loan documents
The title and insurance must be in the LLC’s name
Your LLC’s EIN is used for all closing documents

If your LLC is registered in a different state than the property, you may need to register as a foreign entity in the property’s state. Check with your attorney or CPA before closing.

Wire Fraud Warning

Wire fraud is one of the biggest threats in real estate transactions today. Criminals hack email accounts and send fake wiring instructions that look legitimate. Here’s how to protect yourself:

Never trust wiring instructions received by email alone. Always call the title company directly using a phone number you independently verify (from their website, not from the email) to confirm wire details.
Verify the account number, routing number, and beneficiary name on a live phone call before sending any funds.
Send a small test wire first ($100) and confirm receipt before wiring the full amount.
Be suspicious of any last-minute changes to wiring instructions. This is the most common fraud tactic.

If you wire funds to the wrong account, recovery is extremely difficult and often impossible. Take the extra 10 minutes to verify everything.

What to Bring to Closing

If closing in person, bring:

Government-issued photo ID (driver’s license or passport)
Cashier’s check or wire confirmation for the amount due at closing (personal checks are almost never accepted for large sums)
A copy of your LLC documents (Articles of Organization, Operating Agreement, EIN letter)
Proof of insurance (your insurance agent should have already sent this to the title company, but bring a copy just in case)

Post-Closing Expectations

After closing, here’s what happens next:

Within 1-2 weeks: You receive copies of all recorded documents from the title company, including the deed and mortgage.

Within 30 days: Your loan may be sold or transferred to a servicing company. You’ll receive a notice from both the original lender and the new servicer. This is completely normal and doesn’t change your loan terms.

Within 45-60 days: You receive your final title insurance policy from the title company.

Ongoing: Set up your mortgage payment with the loan servicer. Most DSCR loans offer auto-debit options. Make sure your first payment goes to the right servicer, especially if the loan was transferred.

If the property came with existing tenants, coordinate with the previous owner for a smooth handoff of security deposits, lease agreements, and tenant communications. If it’s vacant, start your tenant placement process right away to begin generating the rental income your DSCR ratio depends on.

For tips on avoiding problems throughout this entire financing journey, check out our guide on DSCR loan mistakes to avoid.

Frequently Asked Questions

How long does it take to close a DSCR loan?

Most DSCR loans close in 21 to 45 days from the time you go under contract. The average is around 30 days. The biggest variable is appraisal turnaround time, which can range from 5 to 14 days depending on the market. Investors who are pre-approved and responsive to underwriting conditions typically close on the faster end of that range.

What are typical closing costs on a DSCR loan?

DSCR loan closing costs typically run 2% to 5% of the loan amount. On a $250,000 loan, expect $5,000 to $12,500 in total closing costs. This includes lender fees (origination, underwriting, processing), third-party fees (appraisal, title search, title insurance, closing fee), and prepaid items (property insurance, tax escrow, prepaid interest). Origination fees (1-2 points) are usually the single largest line item.

Can I close a DSCR loan remotely without being physically present?

Yes. Many states support remote online notarization (RON), which allows you to sign all closing documents via video call with a notary. This is especially useful for out-of-state investors. Alternatively, you can grant power of attorney to a trusted representative to sign on your behalf. Check with your lender and title company to confirm which remote options are available in the state where the property is located.

Can I close a DSCR loan in my LLC's name?

Yes, and most DSCR lenders actually require it. The loan, title, and insurance will all be in your LLC's name. You'll need your LLC to be in good standing, with Articles of Organization, an Operating Agreement, and an EIN from the IRS. If your LLC is in a different state than the property, you may need to register as a foreign entity in the property's state before closing.

What happens if the appraisal comes in low on a DSCR loan?

If the appraisal comes in below the purchase price, your loan amount will be based on the lower appraised value. This means you'll either need to bring more cash to closing to cover the difference, renegotiate the purchase price with the seller, or walk away from the deal (if your contract includes an appraisal contingency). Similarly, if the rent analysis shows income too low to meet the minimum DSCR ratio, the loan may not be approved as structured.

Do I need to set up an escrow account for taxes and insurance?

Most DSCR lenders require an escrow account for property taxes and insurance. This means a portion of each monthly mortgage payment goes into an escrow account managed by the loan servicer, who pays your taxes and insurance on your behalf. Some lenders offer escrow waiver options for borrowers with higher credit scores or lower LTV ratios, though this may come with a slightly higher rate or fee.

What is the Closing Disclosure and when do I receive it?

The Closing Disclosure (CD) is a detailed document that outlines every cost, credit, and financial detail of your loan. Federal law requires you to receive it at least three business days before your closing date. Review it carefully and compare it against your original Loan Estimate. If there are significant changes after the CD is issued, the three-day waiting period resets, which can delay your closing.

How do I protect myself from wire fraud during closing?

Wire fraud is a serious risk in real estate. Always verify wiring instructions by calling the title company directly using a phone number from their official website, not from an email. Never trust wiring details sent only by email. Consider sending a small test wire ($100) and confirming receipt before sending the full amount. Be especially cautious of any last-minute changes to wire instructions, as this is the most common fraud tactic used by criminals.

Disclaimer: LendCity Mortgages is a licensed mortgage brokerage, and our team includes experienced real estate investors. While we are qualified to provide mortgage-related guidance, the broader financial, tax, and legal information in this article is provided for educational purposes only and does not constitute financial planning, tax, or legal advice. For matters outside mortgage financing, we recommend consulting a Chartered Professional Accountant (CPA), licensed financial planner, or qualified legal advisor.

Written by

LendCity

Published

February 15, 2026

Reading Time

12 min read

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