Best DSCR Lenders That Allow LLC Ownership

Most real estate investors eventually want their properties held in LLCs for liability protection and tax benefits. The challenge: many lenders refuse to finance properties owned by entities, forcing you to choose between asset protection and affordable financing.

DSCR lenders typically offer more flexibility than conventional lenders on LLC ownership, but policies vary dramatically. Some allow you to close directly in your LLC's name, others require personal ownership initially with the option to transfer later, and some refuse entity ownership entirely.

This guide identifies which DSCR lenders work with LLCs, their specific requirements and restrictions, and the smartest strategies for balancing asset protection with financing access.

Why Investors Want LLC Ownership

Before diving into which lenders allow LLCs, understand why this matters:

Liability Protection: If a tenant or visitor gets injured on your property, they sue the LLC that owns it—not you personally. Your personal assets (primary residence, savings, other investments) remain protected.

Tax Benefits: LLCs offer pass-through taxation while providing flexibility for depreciation strategies, expense deductions, and eventual sale treatment.

Estate Planning: Transferring LLC membership interests is often simpler than deeding properties, making estate planning and succession more straightforward.

Professional Image: Operating as "Smith Real Estate Holdings, LLC" appears more professional than your personal name when dealing with tenants and vendors.

Separation of Assets: Multiple LLCs allow you to isolate properties from each other (one problem property doesn't expose your entire portfolio).

Privacy: In many states, LLC ownership provides more privacy than holding property in your personal name.

DSCR Lenders That Allow Direct LLC Closing

These lenders allow you to close the loan in your LLC's name from day one, providing immediate asset protection:

1. Visio Lending

LLC Policy: Allows closing directly in LLC name with proper setup and documentation.

Requirements:

• LLC must be established before loan application (ideally 30+ days)
• Operating agreement required
• All LLC members with 20%+ ownership must personally guarantee the loan
• Business credit report on LLC (if it has credit history)
• Same personal credit requirements apply (660+)
• LLC must be single-member or have clearly defined management structure

Structure: The LLC owns the property and is the legal borrower. You (and any other significant members) personally guarantee the debt.

Process:

1. Form LLC before applying
2. Apply in LLC's name
3. All guarantors provide personal financial information
4. Close with LLC as borrower, individuals as guarantors

Advantages:

• Clean from day one—property never in personal name
• LLC shown on title from closing
• No transfer issues or costs
• Simpler for multiple-property LLCs

Considerations: Personal guarantee means you're still personally liable for the debt (though not for property-related liability claims). Also adds 0-0.25% to rate depending on LLC structure and age.

2. Lima One Capital

LLC Policy: Enthusiastically supports LLC ownership for portfolio investors.

Requirements:

• LLC must exist prior to loan application
• Operating agreement and articles of organization required
• Personal guarantees from all 25%+ owners
• No rate premium for established LLCs (90+ days old)
• LLC must be domestic (U.S.-based)

Structure: LLC holds title and borrows in its name. The guarantee protects the lender while the LLC structure protects your personal assets from property liability.

Process:

1. Establish LLC (they can recommend formation services)
2. Apply in LLC name
3. Provide LLC documents and guarantor financial information
4. Close directly in LLC

Advantages:

• No rate premium for established LLCs
• Portfolio-focused approach means they understand multi-LLC strategies
• Will finance multiple LLCs under same ownership
• Excellent for investors using separate LLCs per property

Considerations: Newer LLCs (under 90 days) may face 0.25% rate premium or additional scrutiny.

3. Anchor Loans

LLC Policy: Accepts LLC ownership, particularly common in their California market.

Requirements:

• LLC formed and in good standing
• Operating agreement required
• Personal guarantees from managing members
• LLC must have valid EIN
• Standard personal credit requirements apply

Structure: LLC borrower with personal guarantees from principals.

Advantages:

• Common in their market (California investors often use LLCs)
• Familiar with series LLCs (popular in CA)
• No significant rate premium for LLC ownership
• Will work with multi-member LLCs

Considerations: Requires LLC be established before application, may require more documentation for newer entities.

4. Truss Financial Group

LLC Policy: Very flexible on LLC ownership, including newer entities and unique structures.

Requirements:

• LLC in good standing
• Operating agreement and formation documents
• Personal guarantees
• Will work with LLCs formed specifically for the purchase
• Accepts foreign LLCs (formed in different states than property location)

Structure: LLC as borrower, guarantor provides credit and financial backing.

Advantages:

• Most flexible on LLC age (will work with newly-formed LLCs)
• Accepts non-standard LLC structures
• Will finance properties when LLC is formed specifically for that purchase
• Good for investors wanting to isolate each property in separate LLC

Considerations: May require slightly higher reserves or down payment for brand-new LLCs, rates can run 0.25-0.50% higher for entity borrowing depending on structure.

DSCR Lenders with "Close and Transfer" Requirements

These lenders require you to close in your personal name, then allow transfer to your LLC after closing (usually within 60-90 days):

1. Kiavi

LLC Policy: Closes in personal name but allows transfer to LLC post-closing.

Requirements:

• Must close in individual name initially
• Can transfer to LLC 30-90 days after closing (confirm specific timing)
• Lender must approve LLC transfer (not automatic)
• LLC must be single-member with you as the member (or manager if multi-member)
• Your personal guarantee remains in place post-transfer

Process:

1. Close loan in your personal name
2. Wait required seasoning period (typically 60 days)
3. Submit LLC documents to lender for approval
4. Execute quit-claim deed transferring property to LLC
5. Lender maintains original note (your guarantee continues)

Advantages:

• Access to their competitive rates and programs
• Eventually achieve LLC ownership
• Simpler underwriting initially

Considerations:

• Property is in your personal name initially (liability exposure)
• Transfer process takes time and attention
• Some title companies charge fees for the transfer
• Not all LLCs will be approved for transfer

2. RCN Capital

LLC Policy: Prefers personal closing but increasingly flexible on LLC transfers.

Requirements:

• Initial closing in personal name
• Transfer to LLC permitted after closing (timing varies)
• Lender notification and approval required
• Single-member LLC preferred
• Personal guarantee continues

Process: Similar to Kiavi—close personally, season the loan (usually 90 days), then transfer with lender approval.

Advantages:

• Good for first-time investors who aren't ready to form LLC at purchase
• Allows time to decide on LLC structure
• Eventually achieves asset protection

Considerations:

• Extended period in personal name
• Additional steps and potential costs
• Not guaranteed—lender may deny transfer request

3. CoreVest

LLC Policy: Case-by-case consideration for LLC ownership, generally requires personal closing.

Requirements:

• Typically closes in personal name
• May allow LLC closing for portfolio investors (10+ properties)
• Transfer policies vary by investor relationship
• Very established LLCs with credit history may close directly

Advantages:

• Extremely competitive rates justify the personal closing for many investors
• May become more flexible as you build relationship and portfolio

Considerations:

• Least flexible on LLC ownership among major DSCR lenders
• Best rates but most restrictive policies
• Portfolio investors get better treatment

LLC Formation Strategies for DSCR Borrowers

If you want to finance properties through an LLC, timing and structure matter:

Strategy 1: Form LLC Before Applying (Recommended)

Timeline: Form LLC 60-90 days before loan application

Steps:

1. Choose state for LLC formation (property state vs. Delaware/Wyoming)
2. File articles of organization
3. Obtain EIN from IRS
4. Create operating agreement
5. Open LLC bank account and deposit initial capital
6. Let LLC age 60-90 days
7. Apply for DSCR loan in LLC name

Advantages:

• Clean structure from day one
• Access to lenders requiring established LLCs
• No transfer issues or costs
• Property never in personal name

Best for: Planned purchases where you have time to prepare

Strategy 2: Close Personally, Transfer Later

Timeline: Close in personal name, transfer 30-90 days later

Steps:

1. Apply and close loan in personal name
2. Form LLC after closing (or use existing LLC)
3. Wait required seasoning period
4. Submit transfer request to lender with LLC documents
5. Execute quit-claim deed once approved
6. Update insurance and other property records

Advantages:

• Access to all lenders, even those requiring personal closing
• More time to determine optimal LLC structure
• Can proceed with purchase before LLC formation complete

Best for: Time-sensitive purchases or first-time investors still learning

Strategy 3: Series LLC (Advanced)

What it is: A "master" LLC with individual "series" underneath, each holding one property.

How it works:

• Form Series LLC (only available in certain states: Delaware, Nevada, Texas, etc.)
• Each property goes into a separate series within the master LLC
• Each series provides independent liability protection
• Single entity to manage but separate protection per property

DSCR Lender Acceptance:

• Limited acceptance (Anchor Loans and Lima One most familiar)
• May require closing in personal name then transferring to series
• Often requires attorney opinion letter on series structure

Advantages:

• Ultimate liability protection (isolates each property)
• One entity to maintain vs. multiple separate LLCs
• Tax efficiency (one return for the series LLC)

Considerations:

• Complex structure requiring attorney guidance
• Limited lender acceptance
• Not all states recognize series LLCs
• May face higher rates due to complexity

Single-Member vs. Multi-Member LLCs

DSCR lenders distinguish between LLC structures:

Single-Member LLC (SMLLC)

Structure: You are the sole owner of the LLC.

Lender Perspective: Treated similarly to personal ownership since you're the sole economic beneficiary.

Advantages:

• Simplest LLC structure
• Most lenders accept without premium
• Easier underwriting (only your credit matters)
• Simple taxation (Schedule E on personal return)

Disadvantages:

• Some debate about liability protection strength
• "Alter ego" piercing risk if not properly maintained

Best for: Individual investors holding properties separately

Multi-Member LLC

Structure: Two or more owners (often spouses, partners, or family).

Lender Perspective: More complex—all significant members must guarantee and provide financial information.

Advantages:

• Stronger liability protection
• Partnership flexibility
• Clear for estate planning and succession

Disadvantages:

• All members' credit affects qualification
• More complex underwriting
• May face 0.25-0.50% rate premium
• Requires robust operating agreement

Best for: Spouse co-ownership, partnership investments, family holdings

Personal Guarantees: What They Mean

Even when lending to your LLC, DSCR lenders require personal guarantees. Understanding what you're signing matters:

What a personal guarantee means: If the LLC defaults on the loan, the lender can pursue you personally for the debt. Your personal assets (primary residence, bank accounts, other properties) are at risk.

What it doesn't mean: The guarantee doesn't expose your personal assets to property-related liability (slip-and-fall, tenant issues, etc.). Those claims are still limited to the LLC and its assets.

Practical impact:

• LLC protects you from property operations liability
• Personal guarantee exposes you to loan default liability
• Net result: you're protected from events you can't control (tenant lawsuits) but not from events you can (making mortgage payments)

This is still valuable protection. Most investor lawsuits come from property conditions, tenant disputes, or injury claims—not loan defaults.

LLC Ownership Costs and Considerations

Holding properties in LLCs creates additional costs:

Formation Costs: $100-500 to form LLC (DIY) or $500-2,000 with attorney assistance

Annual Fees: $0-800 per year depending on state (California charges $800/year, many states charge under $100)

Registered Agent: $50-300/year if you don't serve as your own agent

Separate Tax Return: $500-2,000/year for LLC tax preparation if using accountant

Insurance: Potentially higher insurance costs (though often minimal)

Rate Premium: 0-0.50% higher DSCR rates for LLC borrowing

Maintenance: Operating agreements, meeting minutes (even for single-member), separation of finances

Cost-benefit analysis:

For a $300,000 property with a 0.25% rate premium:

• Additional interest: $62.50/month = $750/year
• LLC formation and maintenance: $500-1,500/year
• Total LLC cost: $1,250-2,250/year

The question: Is $1,250-2,250 annually worth the liability protection and other benefits? For most investors with significant personal assets, the answer is "absolutely yes."

State-Specific LLC Considerations

Where you form your LLC affects costs and benefits:

Form in Property State (most common):

• Required to register in that state anyway if property is there
• Simplest for lenders to understand
• Avoids foreign LLC registration fees
• Subject to that state's LLC laws and annual costs

Form in Delaware/Wyoming/Nevada (sometimes recommended):

• Potentially stronger liability protection
• More privacy in some cases
• Still must register as "foreign LLC" in property state (additional cost)
• May confuse some lenders
• Makes sense primarily for large portfolios or specific tax situations

Practical advice: Unless you have specific legal or tax reasons otherwise, form your LLC in the state where the property is located. It's simpler, cheaper, and lenders understand it better.

LLC Ownership and Insurance

Properties owned by LLCs require adjustments to insurance:

Named Insured: Policy must list the LLC as named insured (not your personal name).

Loss Payee: Lender must be listed as loss payee.

Additional Insured: Lender typically requires being named additional insured.

Liability Coverage: Consider higher liability limits ($1-2 million) since you're explicitly seeking asset protection.

Umbrella Policy: Many investors maintain umbrella policies covering all properties under their LLC holdings.

Notify your insurance agent that the property will be LLC-owned before closing. Some insurers charge more for LLC-owned properties, others don't care.

Bottom Line on LLC Ownership

Choose Visio Lending or Lima One Capital if you want to close directly in your LLC name with minimal hassle and no rate premium.

Choose Anchor Loans if you're in California or using series LLC structures.

Choose Truss Financial if you have a newly-formed LLC or unique entity structure.

Consider Kiavi or RCN Capital if you're willing to close personally and transfer to LLC post-closing, particularly if their rates or programs are otherwise superior.

Avoid CoreVest for LLC ownership unless you're a large portfolio investor—their rates are excellent but LLC flexibility is limited.

Form your LLC 60-90 days before applying for the cleanest process. If you're buying now and need to close quickly, use the close-and-transfer strategy with a lender who explicitly allows it.

The personal guarantee means you're still on the hook for the debt, but the LLC structure protects your personal assets from property-related liability. For most investors, that's a worthwhile trade.

Don't let LLC requirements complicate your first property purchase. Start with personal ownership if needed, build experience, then form LLCs for subsequent properties once you understand the systems and costs involved.