DSCR Closing Costs: Complete Breakdown

DSCR closing costs typically run 2–5% of the loan amount. On a $200,000 loan, that's $4,000–$10,000 on top of your down payment. Here's every fee you'll encounter and how to minimize them.

The Complete Fee Breakdown

Lender Fees

Origination fee example:

• $200,000 loan × 1.5% = $3,000
• This is negotiable, especially for repeat borrowers

Third-Party Fees

Prepaid Items

Total Cost Examples

$150,000 DSCR Loan:

$250,000 DSCR Loan:

$400,000 DSCR Loan:

Percentage decreases with larger loans because many fees are flat-rate.

How to Reduce Closing Costs

1. Negotiate Origination Fee

Origination is the most negotiable fee:

• First-time with lender: 1.5–2.0%
• Second loan: Ask for 1.0–1.5%
• Volume borrower (3+ loans): Push for 0.5–1.0%
• Some lenders offer "no origination" with a slightly higher rate

2. Shop Title Companies

Title insurance and settlement fees vary significantly:

• Get quotes from 3 title companies
• Ask your lender which title companies they work with
• Online title companies (e.g., Spruce, Qualia) are often cheaper
• Savings: $500–$1,500

3. Seller Concessions

Negotiate seller credits toward closing costs:

• Common in buyer's markets: 2–3% seller concession
• On a $200,000 purchase: $4,000–$6,000 credit
• Reduces your out-of-pocket to near-zero closing costs
• DSCR lenders typically allow 2–6% seller concessions

4. Lender Credits

Some lenders offer credits in exchange for higher rates:

• Accept 0.25% higher rate = $2,000–$3,000 credit toward closing
• Makes sense if you plan to refinance within 3–5 years
• Don't accept if you're holding long-term (the rate premium costs more)

5. Close at End of Month

Prepaid interest accrues from closing date to month-end:

• Close on the 28th: 2–3 days of prepaid interest
• Close on the 5th: 25–26 days of prepaid interest
• Savings: $200–$500

What's NOT Included in Closing Costs

These are separate from closing costs but often forgotten:

Total Cash Needed at Closing

$200,000 purchase, 25% down, DSCR loan:

• Down payment: $50,000
• Closing costs: $7,500
• Reserves (6 months): $9,000
• Total cash needed: $66,500

Frequently Asked Questions

Can I roll closing costs into the DSCR loan?

Generally no for purchases. For refinances, you can sometimes roll closing costs into the new loan amount (as long as total LTV stays within guidelines).

Are DSCR closing costs higher than conventional?

Slightly. DSCR origination fees (0.5–2.0%) are higher than conventional (0–1.0%). Third-party fees are similar. Total DSCR closing costs run 0.5–1.5% higher than conventional.

Do I pay closing costs on a DSCR refinance?

Yes. Refinance closing costs are typically $3,000–$6,000 (slightly lower than purchase because no title transfer). These can often be rolled into the loan.

Can I use gift funds for closing costs?

Most DSCR lenders allow gift funds for down payment and closing costs. A gift letter from the donor is typically required.

When do I get the Loan Estimate?

Within 3 business days of application, the lender provides a Loan Estimate detailing all expected costs. Compare this across lenders before committing.

The Bottom Line

DSCR closing costs of 2–5% are a known, manageable expense. The biggest lever is negotiating origination fees and shopping title companies. For a $200,000 DSCR purchase, budget $6,000–$10,000 in closing costs on top of your 25% down payment.

Smart strategies — seller concessions, end-of-month closing, volume discounts — can cut your costs by $2,000–$5,000. Every dollar saved at closing is a dollar you can invest elsewhere.

Estimate your DSCR closing costs with HonestCasa.