DSCR Loan Closing Costs: A Full Breakdown for Investors
DSCR Loan Closing Costs: A Full Breakdown for Investors
DSCR financing typically comes with closing costs between 2% and 5% of the loan amount. On a $500,000 investment property purchase, that means $10,000 to $25,000 in fees before you factor in your down payment or reserves. Here is what each cost actually is, what it runs, and what to watch for if you are buying in Massachusetts.
What Are the Main Closing Costs on a DSCR Loan?
Every DSCR closing has a mix of lender fees and third-party costs. Lender fees go directly to whoever is originating the financing. Third-party costs go to appraisers, title companies, attorneys, and government entities. Both hit your cash-to-close number.
Origination fee (1-2 points): This is the lender’s fee for creating the financing. One “point” equals 1% of the loan amount. On a $400,000 DSCR loan, 1.5 points costs $6,000. This is not the same as discount points, which are optional prepaid interest to buy down the rate. Origination points are a cost; discount points are a strategic choice. Understanding how origination and rate interact is important—for a deeper look, see DSCR Loan Interest Rates in 2026: What to Expect.
Underwriting fee ($500-$1,200): Covers the lender’s review of the deal, the property’s DSCR, and the overall risk profile. DSCR deals require manual underwriting, which is why this fee tends to run higher than conventional financing.
Appraisal ($400-$700+): A licensed appraiser evaluates the property’s market value and provides a rent schedule (Form 1007 for single-family, or operating income statement for multi-unit). The appraisal is non-negotiable—lenders need it to confirm the property supports the loan amount and the DSCR ratio.
Title insurance and title search ($1,000-$3,000+): Title insurance protects the lender against ownership disputes. The title search confirms no liens or claims exist on the property. Cost scales with the purchase price.
Prepaid escrows (varies): Most lenders require you to fund an escrow account at closing for property taxes and insurance. Expect to prepay roughly 2-3 months of property taxes and 12 months of hazard insurance upfront. In higher-tax Massachusetts markets, this line item adds up fast.
Other common fees: Processing fee ($400-$800), credit report ($30-$50), flood certification ($5-$15), and recording fees (varies by county). Individually small, but they stack.
How Are DSCR Closing Costs Different from Conventional Financing?
DSCR closing costs run higher than conventional investment property financing for two reasons. First, DSCR deals require manual underwriting because there is no automated income verification—every file gets individually reviewed, which costs the lender more to process. Second, origination points on DSCR financing typically land at 1-2 points versus 0.5-1 point on conventional. The tradeoff is that you skip the W-2s, tax returns, and DTI limits that make conventional financing slow or impossible for many investors.
One cost you will not see on a DSCR closing: private mortgage insurance (PMI). DSCR lenders price their risk into the rate and origination instead. That said, DSCR typically requires a minimum 20% down payment, which is also a major cash consideration—for details on how down payment expectations work, see DSCR Loan Down Payment: How Much Do You Actually Need.
What Massachusetts-Specific Costs Should You Expect?
Massachusetts is an attorney state. Both the buyer and seller must be represented by a real estate attorney at closing. This is not optional. Buyer-side attorney fees typically run $800 to $1,500 depending on the deal’s complexity. This is a line item that does not exist in many other states, so out-of-state investors buying MA rental properties should plan for it.
Massachusetts also charges a deed excise tax of $4.56 per $1,000 of the sale price. The seller typically pays this, but as an investor you should understand the full cost picture—especially on a refinance where you may be responsible for certain transfer-related costs. Property tax escrows tend to be higher in MA markets as well, with average effective rates around 1% statewide but significantly higher in some municipalities.
Knowing your closing costs upfront helps avoid surprises that delay the timeline. For a realistic look at how long the process takes from application to funded, see How Long Does It Take to Close a DSCR Loan.
How to Estimate Your Total Cash to Close
Closing costs are only one part of the check you write at the closing table. Your total cash to close is: down payment + closing costs + reserves.
On a $500,000 Massachusetts investment property with 25% down and estimated closing costs of 3%, the math looks like this: $125,000 down payment + $11,250 in closing costs + 3-6 months of PITIA in reserves (roughly $7,500-$15,000 depending on the property). Total cash needed: approximately $143,750 to $151,250.
Not sure if your deal’s numbers work? Score it in 2 minutes with our free DSCR Deal Readiness Scorecard before approaching any lender. You can also run the numbers through our free DSCR Deal Analyzer Calculator to see how rent coverage, rate, and costs affect your deal.
Not ready to submit? Download the Massachusetts DSCR Deal File Checklist and get your file organized first.
CapitalVanta is not a lender. We provide DSCR deal screening and lender introduction services for Massachusetts investment property investors.
