Buy or refinance your rental under a company
DSCR loan in an LLC
Close in your LLC from day one — no transferring title afterward, no due-on-sale risk.
The part most guides skip: your entity has to be built a specific way. How many members you have, who signs, and what sits above your LLC can all decide whether the file clears.
- Title vests in the LLC at closing
- Up to 4 owners
- LP, corp & S-corp too
- 46 states + D.C.
The basics
Why investors close in an entity
A DSCR loan is a business-purpose loan, so the entity can be the borrower.
The LLC holds title from the recording date and is named on the note. You sign a personal guarantee alongside it.
Conventional investment loans require the property to close in your personal name — and moving it into an LLC afterward can trigger the due-on-sale clause, giving the lender the right to call the balance.
DSCR skips that problem entirely by letting the entity take title at closing.
The part nobody publishes
Does your entity structure actually qualify?
Most lenders will just tell you that “LLCs are allowed” but there’s a bigger reality than that.
In practice there are hard limits on members, ownership percentages, and what can sit above your LLC in the ownership chain. Tap a structure to see where it lands.
Single-member LLC
The most common structure for DSCR borrowers and the simplest to underwrite. You’re the sole member, the sole guarantor, and the entity takes title at closing.
- You are the managing member, so you meet the guarantor requirement automatically.
- Title vests in the LLC's exact registered name at closing — no transfer afterward.
- Standard document set: Articles, Operating Agreement, EIN, Certificate of Good Standing.
- You'll still sign a personal guaranty in your individual capacity. The loan is not non-recourse.
Multi-member LLC
Partnerships work, within limits. The cap on owners and the guarantor threshold are the two rules that catch people, and neither is published anywhere else.
- Up to 4 entity owners permitted.
- Ownership percentages come from the Operating Agreement, so make sure it's current before application.
- The guarantor must be a managing member or majority owner holding at least 25% — a 10% passive partner can't be the one signing.
- Every qualifying guarantor is credit-qualified individually, to the same standard as an individual borrower.
If you have more than four owners, the structure isn’t dead — it usually needs to be reorganized or matched to a different program. Send it over before you restructure anything.
LLC owned by another LLC
Layered ownership is allowed, but only so deep, and only if the chain is clean. This is where sophisticated investors get tripped up, and almost no lender publishes the rule.
- Permitted up to two layers of entity ownership.
- Guideline requirements must be satisfied for each entity in the stack, so expect a document set per layer.
- The ownership chain must be consistent from top to bottom, with no discrepancies between the documents.
- The individuals at the top of the chain are the guarantors — for example, if your borrowing LLC is wholly owned by a holding LLC, the owners of the holding company sign.
- Add a trust anywhere in the chain and the structure becomes ineligible.
Three or more layers, or a trust in the middle, is where files get declined late. Have us look at the org chart at application, not at underwriting.
LLC owned by a trust
A layered entity with a trust in the ownership chain is ineligible — even when every other part of the file is strong. It’s a structural rule, not a judgment call about your credit.
- This often surprises investors who set up estate-planning structures first and go looking for financing second.
- Entities layered with a trust are not eligible, full stop.
- Irrevocable trusts and blind trusts are ineligible as borrowers.
There are usually workable alternatives — restructuring the chain, or vesting the subject property in an entity that sits outside the trust. It’s worth a conversation with your attorney and us together before you rule the deal out.
Land trust
Land trusts are commonly recommended in investor circles for privacy, but they’re excluded as borrowers on these programs.
- An LLC achieves most of the privacy and liability goals investors are after, and it is eligible.
- So are non-profits, blind trusts, and irrevocable trusts.
- Land trusts are an ineligible borrower type.
If privacy is the goal, an LLC formed in a state that doesn’t publish member names usually accomplishes it without creating a financing problem. Ask your attorney.
Corporation, S-corp, or LP
LLCs get all the attention, but they’re not the only eligible entity. Corporations, S-corps, limited partnerships, and general partnerships can all hold title.
- Corporations, S-corps, LPs, and general partnerships are all eligible borrowers.
- The entity must be formed for the purpose of owning and managing real estate.
- Same guarantor rules apply — managing member or majority owner, 25% minimum ownership, personal guaranty required.
- Document requirements mirror the LLC set: formation documents, governing agreement, EIN, and good standing.
The right entity type is a tax and legal decision. Most investors land on an LLC, but if your CPA has you in an S-corp for other reasons, it doesn’t block the loan.
Before you can close
The entity documents underwriting will ask for
None of these are hard to produce — but chasing them late is one of the most common reasons an entity closing slips. Get them together at application.
Articles of Organization
Proof the entity legally exists, filed with the state.
Operating Agreement
Shows ownership percentages and who has authority to borrow and sign.
Tax ID / EIN letter
The entity's federal tax identification number.
Certificate of Good Standing
Dated within 30 days of closing — the one that most often has to be re-pulled.
Foreign entity registration
If your LLC was formed in a different state than the property sits in.
Personal guaranty
Signed by each qualifying guarantor in their individual capacity at closing.
Straight talk
What the LLC protects you from — and what it doesn't
This is the most misunderstood part of entity vesting, and it’s worth being blunt about before you close.
The personal guarantee is not optional
Effectively every DSCR lender requires a personal guarantee from the managing member or majority owner. The loan is made to the entity, but you remain personally liable to the lender if it defaults. Vesting in an LLC does not make a DSCR loan non-recourse.
What it does protect
Claims arising from the property — a tenant injury suit, a habitability claim, a contractor dispute. Those generally stop at the entity.
What it doesn't
The mortgage itself. If the loan defaults, the lender can pursue you personally under the guaranty you signed.
Three things that catch entity borrowers
The details that delay closings
Community property states can require your spouse's consent
If you're in a community property state, signing a personal guaranty when your spouse isn't on the loan generally triggers a spousal consent form — executed at closing and dated the same day as the note. It's routine, but it surprises people at the table if nobody mentioned it.
The entity name has to match exactly
Title must vest in the entity's precise registered name — including the suffix and the formation state. "Sunset Properties LLC" and "Sunset Properties, LLC, a Georgia limited liability company" are not interchangeable to a title company. Mismatches send documents back for correction.
Vesting can change your prepayment penalty
This one is genuinely obscure. In several states, prepayment penalties are only permitted when the borrower is an entity rather than an individual — and in at least one, entity vesting is a condition of prepay eligibility. Since prepay structure affects pricing, how you take title can influence the rate you're offered. Worth asking before you choose.
At a glance
DSCR entity vesting requirements
|
Requirement
|
Andes DSCR program
|
Typical elsewhere
|
|---|---|---|
|
Eligible entities
|
LLC, LP, general partnership, corporation
|
Usually LLC only
|
|
Maximum owners
|
Up to 4 entity owners
|
Rarely stated
|
|
Guarantor threshold
|
Managing member or majority owner holding at least 25%
|
Rarely stated
|
|
Layered entities
|
Up to 2 layers, ownership chain must match top to bottom
|
Rarely addressed
|
|
Trusts in the chain
|
Not eligible — including land trusts and blind trusts
|
Varies, often unstated
|
|
Personal guaranty
|
Required from all qualifying guarantors
|
Required
|
|
Entity formation state
|
Any — foreign registration required if different from the property state
|
Same
|
|
Rate impact of vesting
|
None. Base pricing doesn't change because you vest in an entity
|
Generally none
|
DSCR has no agency guideline — these come from Andes Mortgage’s wholesale programs, not an industry average. Entity rules vary by lender and formation state.
How it works at closing
Who signs what
How an entity-vested DSCR loan is structured
Three documents carry the structure, and they're signed in different capacities — which is why the paperwork looks unfamiliar the first time:
- The note — signed by the guarantor as a member or managing member of the entity. The entity is the borrower of record.
- The mortgage or deed of trust — also signed in that member capacity; title vests in the entity's exact registered name.
- The personal guaranty — signed in your individual capacity, separately. This is what makes you personally liable and it's required on effectively every program.
Qualification itself doesn’t change: the property’s rent still has to cover the payment, and your personal credit is still pulled as guarantor. The entity changes how title is held, not how the deal is underwritten.
Business-purpose, non-owner-occupied loans. Available in 46 states and Washington, D.C.
Reviewed by Marcos Zambrano, President — MLO NMLS #988935. Andes Mortgage, LLC NMLS #2187991.
Why the program matters here
Entity rules are where lenders differ most quietly
Credit and leverage get advertised. Entity rules don’t — they live in the fine print, and they’re rarely discovered until an underwriter asks for one more document. Owner counts, ownership thresholds, layered structures, and trust restrictions all vary from program to program.
Common questions
DSCR in an LLC — frequently asked
Do I need an LLC to get a DSCR loan?
No. DSCR loans close in personal names all the time. An LLC is optional — it’s about liability and portfolio structure, not eligibility. What matters to the lender is that the property is non-owner-occupied and the loan is for business purposes.
Does closing in an LLC raise my rate?
No. Base pricing doesn’t change because you vest in an entity. The one indirect effect worth knowing: in some states prepayment penalties are only permitted for entity borrowers, and prepay structure can affect pricing — so vesting can influence your options even though it doesn’t carry a markup itself.
How many partners can be on the LLC?
Up to four entity owners on our programs. Each qualifying guarantor is underwritten individually, and the guarantor signing must be a managing member or majority owner holding at least 25%.
Can my LLC be owned by another LLC?
Yes, up to two layers, as long as the ownership chain is consistent from top to bottom with no discrepancies. The individuals at the top of the chain are the guarantors. A trust anywhere in the chain makes the structure ineligible.
Can I move a property I already own into an LLC?
If it’s financed conventionally, transferring title can trigger the due-on-sale clause and give your lender the right to call the balance. Many investors refinance into a DSCR loan and vest in the entity at closing instead, which avoids the transfer entirely. Talk to your attorney before moving title on a financed property.
Does an LLC make the loan non-recourse?
No. Effectively every DSCR program requires a personal guarantee, so you remain personally liable to the lender for the debt. The LLC shields you from claims arising out of the property — it does not shield you from the mortgage.
Keep going
More on DSCR Loans
DSCR Loans
The full program guide
DSCR Loan Requirements
Credit, reserve, ratios
DSCR HELOC
Tap the equity without refinancing
DSCR for Airbnb
Short-term rental income
DSCR Cash-Out Refinance
Pull equity from a rental
DSCR loan calculator
Do the numbers actually work?
Tell us how your entity is structured
Members, ownership percentages, anything sitting above the LLC — send it over and we’ll tell you which programs it clears before you spend a dollar on the file.