DSCR Loan Closing Costs: Complete Breakdown

DSCR loan closing costs typically range from 2% to 5% of the loan amount, translating to $6,000-$15,000 on a $300,000 loan. That's higher than conventional mortgages, which usually run 2-3%.

Understanding exactly what you're paying for—and which fees are negotiable—can save you thousands of dollars at closing.

Total Cost Expectations by Loan Size

Here's what real-world DSCR closings actually cost:

• $150,000 loan: $4,500-$7,500 (3-5%)
• $300,000 loan: $6,000-$12,000 (2-4%)
• $500,000 loan: $10,000-$20,000 (2-4%)
• $1,000,000 loan: $20,000-$35,000 (2-3.5%)

Smaller loans carry higher percentage costs because fixed fees represent a larger portion of the total. A $1,500 appraisal is 1% of a $150,000 loan but only 0.3% of a $500,000 loan.

Complete DSCR Loan Fee Breakdown

Let's examine every fee you'll encounter, what it costs, and whether you can negotiate it.

Loan Origination Fees

What it is: The lender's fee for processing and funding your loan.

Typical cost: 1-2% of loan amount ($3,000-$6,000 on $300,000)

Negotiable: Sometimes. Shop multiple lenders—this fee varies significantly. Some lenders charge 0.5% while others charge 2%.

Watch for: Lenders advertising "no origination fee" often compensate by charging higher interest rates. Calculate the total cost over your expected holding period. A 0.25% higher rate costs more than a 1% origination fee if you hold the property beyond 3-4 years.

Underwriting Fee

What it is: Fee charged for reviewing and approving your loan application.

Typical cost: $800-$1,500

Negotiable: Rarely. Most lenders have fixed underwriting fees.

Watch for: Double-dipping. Some lenders include underwriting in the origination fee. If you're paying 2% origination plus a separate $1,200 underwriting fee, that's expensive—push back or shop elsewhere.

Processing Fee

What it is: Administrative fee for managing your loan file through closing.

Typical cost: $500-$1,200

Negotiable: Sometimes. This is often a junk fee.

Watch for: Duplicate fees. "Processing," "application," and "administrative" fees are often the same thing with different names. If you see multiple, question them.

Application Fee

What it is: Upfront fee to submit your application.

Typical cost: $0-$750

Negotiable: Often. Many lenders waive this if you ask.

Watch for: Non-refundable application fees. If you're paying $500 upfront and the loan doesn't close, you lose that money. Apply to lenders who credit this fee toward closing costs if you proceed.

Appraisal Fee

What it is: Cost for a licensed appraiser to determine property value and estimate rental income.

Typical cost: $500-$800 for single-family, $800-$1,500 for 2-4 units

Negotiable: No. Appraisers are independent third parties.

Watch for: Marked-up appraisal fees. The lender orders the appraisal but some charge $800 when the appraiser only charges $600. Ask for the appraisal invoice.

For DSCR loans, appraisers must include a rent schedule showing comparable rental properties. This adds $100-$200 compared to standard appraisals.

Credit Report Fee

What it is: Cost to pull your credit from all three bureaus plus any co-borrowers.

Typical cost: $50-$125

Negotiable: No, but verify accuracy. A tri-merge credit report costs lenders $30-$50. Charges above $100 are excessive.

Flood Certification Fee

What it is: Determines if the property is in a FEMA flood zone.

Typical cost: $15-$25

Negotiable: No. This is a standard third-party service.

Title Fees

Title costs are usually your largest non-lender expense:

Title search: $200-$500

• Examines public records to verify the seller owns the property free of liens

Title insurance (lender's policy): $800-$2,500

• Protects the lender if title issues emerge after closing
• Cost varies by state and loan amount
• Required by all lenders

Title insurance (owner's policy): $500-$1,500

• Protects you against title defects
• Optional but recommended
• Often discounted when purchased simultaneously with lender's policy

Settlement/closing fee: $500-$1,200

• Charged by the title company for conducting the closing

Negotiable: Somewhat. Shop title companies—prices vary 30-40% in the same market. Your lender might require you to use specific title companies, but you can often choose from their approved list.

Attorney Fees

What it is: In attorney states (mainly Northeast and Southeast), lawyers handle closings instead of title companies.

Typical cost: $800-$2,500

Negotiable: Sometimes. Get quotes from multiple real estate attorneys.

States requiring attorneys: Connecticut, Delaware, Georgia, Massachusetts, North Carolina, Rhode Island, South Carolina, West Virginia, and others.

Survey Fee

What it is: A professional survey showing property boundaries, structures, and easements.

Typical cost: $400-$800

Negotiable: Sometimes avoidable. If the seller has a recent survey (within 5-10 years) and the title company will insure against survey issues, you can skip this expense.

Watch for: Lender requirements. Many DSCR lenders require new surveys even if recent ones exist.

Escrow/Impound Setup Fees

What it is: Fee to establish your escrow account for property taxes and insurance.

Typical cost: $0-$300

Negotiable: Often. This is largely a junk fee—ask for it to be waived.

Prepaid Property Taxes

What it is: Reimbursing the seller for property taxes they prepaid beyond the closing date.

Typical cost: Varies wildly based on location and closing date—$0 to several thousand dollars

Negotiable: No. This is a mathematical proration based on the tax year and closing date.

Strategy: Close early in the tax year (January-March in most areas) to minimize prepaid tax obligations.

Prepaid Insurance

What it is: First year's homeowners/landlord insurance premium, paid at closing.

Typical cost: $1,200-$3,500 for investment properties

Negotiable: Premium isn't negotiable at closing, but shop insurance companies before closing. Investment property insurance costs 25-30% more than primary residence coverage.

Watch for: Lender-placed insurance. If you don't provide proof of insurance, lenders will force-place coverage at 2-3x normal rates.

Escrow Reserve Deposits

What it is: Money held in escrow to pay future insurance and tax bills.

Typical cost: 2-6 months of taxes and insurance ($2,000-$6,000)

Negotiable: Partially. Some lenders allow you to waive escrows if you put down 25%+ and pay a 0.25% rate premium. Run the numbers—that rate increase might cost more than the float benefit of controlling the money yourself.

Recording Fees

What it is: County charges to record the deed and mortgage.

Typical cost: $125-$500 depending on location

Negotiable: No. These are government fees.

Transfer Taxes

What it is: State, county, or city taxes on property transfers.

Typical cost: $0-2% of purchase price (location-dependent)

Negotiable: No, but sometimes negotiable between buyer and seller regarding who pays.

Watch for: High-tax locations. Pennsylvania charges 2%, Maryland charges 0.5%, while Texas and Florida charge nothing. This significantly impacts your closing costs.

HOA Fees and Transfer Fees

What it is: Homeowners association charges for transferring ownership and certifying account status.

Typical cost: $200-$800

Negotiable: No, but you can negotiate with the seller to pay these in some markets.

Courier and Wire Fees

What it is: Charges for overnight documents and wiring funds.

Typical cost: $50-$150

Negotiable: Sometimes. These are often junk fees that can be reduced or eliminated.

DSCR-Specific Cost Increases

DSCR loans cost more than conventional mortgages for several reasons:

Higher Lender Fees

Non-QM lenders charge 1-2% origination versus 0-1% for conventional loans. They're smaller operations with higher costs and less automation.

Enhanced Appraisals

The rent analysis requirement adds $100-$200 to appraisal costs. Appraisers must research 3-6 comparable rentals and document them thoroughly.

Complex Underwriting

DSCR underwriting requires cash flow analysis, rent comparability review, and property condition evaluation beyond standard mortgage underwriting. This justifies higher underwriting fees.

No Lender Credits

Conventional loans often offer lender credits (lender pays some closing costs in exchange for higher rate). DSCR lenders rarely provide this option.

Strategies to Reduce DSCR Closing Costs

You can't eliminate closing costs, but you can minimize them significantly.

Shop Lender Fees Aggressively

Get detailed Good Faith Estimates from at least three lenders. Compare:

• Origination fees
• Underwriting fees
• Processing fees
• Rate-and-fee combinations

Example: Lender A quotes 8.5% with $3,000 in fees. Lender B quotes 8.25% with $6,000 in fees. On a $300,000 loan held 7 years, Lender B is cheaper despite higher upfront costs because the 0.25% rate difference saves $45/month ($3,780 over 7 years).

Question Every Fee

Ask your lender to justify each charge:

"What is this $1,200 processing fee for? Is that work included in your origination fee?"

Many borrowers recover $500-$1,500 simply by questioning fees. Lenders often reduce or waive fees when challenged.

Shop Title and Attorney Services

Title insurance premiums are regulated in some states but not all. Where rates aren't regulated, quotes can vary 40%.

Call three title companies with your loan amount and property address. Ask for out-the-door pricing including all title fees.

Negotiate Seller Concessions

In slower markets, sellers might contribute 2-3% toward closing costs. On a $300,000 purchase, that's $6,000-$9,000.

Strategy: Offer full asking price with 3% seller concession instead of a lower offer. Sellers often accept because it appears like they got their price.

Time Your Closing Strategically

Closing late in the month reduces prepaid per-diem interest. If you close on the 28th instead of the 15th, you save 13 days of interest—about $325 on a $300,000 loan at 8%.

Closing early in the tax year minimizes prepaid tax obligations.

Waive Escrow If Possible

Some lenders allow escrow waivers at 75% LTV or lower. This eliminates 2-6 months of reserve deposits ($2,000-$5,000), though you'll pay a 0.25% rate premium.

Math check: A 0.25% rate increase costs $62/month on $300,000. If eliminating escrow frees up $4,000, it takes 64 months to break even. If you'd rather have the cash now for other investments, waiving escrow makes sense.

Reuse Recent Surveys

If the seller has a survey from the last 10 years and nothing's changed on the property, ask the title company if they'll insure against survey defects without a new survey. This saves $400-$800.

Bundle Insurance Policies

If you have auto, umbrella, or other properties insured, bundle your new investment property insurance with the same carrier. Bundling often saves 10-20% on premiums.

Hidden Costs to Budget For

Beyond closing costs, budget for these expenses:

Property Inspection

Cost: $400-$800

Even though DSCR lenders don't require inspections, you should get one. Discovering a $12,000 roof problem before closing lets you negotiate a price reduction.

Rent-Ready Repairs

Cost: $2,000-$10,000+

DSCR lenders base qualification on market rent, but achieving market rent might require repairs, painting, or updates. Budget conservatively.

First Month Operating Costs

Cost: $2,000-$5,000

Even if the property is rented, budget for immediate expenses like changing locks, HOA fees, utilities during turnover, and minor repairs.

Reserves

Cost: 6-12 months of PITIA (Principal, Interest, Taxes, Insurance, Association fees)

Many DSCR lenders require 6-12 months of reserves. On a property with $2,500/month PITIA, that's $15,000-$30,000 in liquid assets after closing.

Sample DSCR Closing Cost Worksheet

Here's a realistic example for a $300,000 DSCR loan at 75% LTV on a $400,000 property:

Lender Fees:

• Origination (1.5%): $4,500
• Underwriting: $1,095
• Processing: $795
• Appraisal: $750
• Credit report: $75

Title/Escrow:

• Title search: $325
• Lender's title policy: $1,650
• Owner's title policy: $850
• Settlement fee: $795
• Recording fees: $285

Prepaid/Reserves:

• Insurance premium: $2,200
• Property tax escrow (4 months): $2,400
• Insurance escrow (2 months): $367
• Prepaid interest (15 days): $987

Other:

• Survey: $650
• HOA transfer: $350

Total: $17,074 (4.3% of loan amount, 5.7% of purchase price including down payment)

When to Roll Costs Into the Loan

Some DSCR lenders allow you to finance closing costs by increasing the loan amount, but this only works on refinances or if you have enough equity.

On a purchase, you can't exceed 80% LTV typically, so rolling in costs means paying more than asking price—only possible if the property appraises higher than purchase price.

On a refinance, you can often roll costs into the loan if you're below 80% LTV. A $300,000 refinance with $8,000 costs becomes a $308,000 loan.

The trade-off: Financing $8,000 in closing costs at 8% over 30 years costs $13,378 in total payments. You'd pay $5,378 in interest to avoid paying $8,000 upfront. This only makes sense if you can invest that $8,000 and earn more than 8% annually.

Bottom Line

DSCR loan closing costs average 2-5% of the loan amount, with smaller loans hitting the higher end and larger loans trending lower. Lender fees constitute the most variable component—shopping three lenders can save $2,000-$5,000.

Don't accept the first Loan Estimate you receive. Question fees, shop title services, and negotiate seller concessions. The few hours invested in cost reduction directly convert to money saved.

Budget an additional 15-20% beyond the Loan Estimate for unexpected costs and immediate post-closing expenses. Arriving at closing financially prepared prevents unpleasant surprises and sets you up for successful property ownership.