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6 Steps for Choosing an Investor Lender
By Jason Taken · Principal, Jaken Finance Group
How to shop hard money and DSCR lenders — term sheet comparison, draw schedules, extension fees, licensing, and BRRRR exit alignment before you bind contract.
Choosing a mortgage lender for owner-occupied homes is a different exercise than choosing hard money or DSCR for non-owner-occupied deals. Jaken Finance Group funds investment property only — this guide is for sponsors shopping 8.99%–13.5% bridge and 5.75%–10.5% permanent debt, not primary-home rate shopping.
Hard money vs DSCR — pick lane first
| Criterion | Hard money | DSCR permanent |
|---|---|---|
| Rate | 8.99%–13.5% IO | 5.75%–10.5% amortizing |
| Close | 7–14 business days | 21–45 days |
| Underwriting | ARV, LTC, scope, exit | Rent 1.0+, LTV, credit |
| Best for | Value-add, flip, heavy rehab | Stabilized hold, BRRRR exit |
Same sponsor often uses both in sequence — align exit lender before you close bridge. Red flags guide · Choose right lender.
Step 1 — Run a structured shopping session
Apply the same deal to two or three lenders:
- Identical purchase price, scope, and sold comps
- Written term sheet, not verbal rate
- Same entity vesting and exit narrative
Compare total cost to exit — not rate alone.
Step 2 — Improve the file before you shop
Incomplete files get worse terms or slow quotes:
| Document | Hard money | DSCR |
|---|---|---|
| Purchase contract / payoff | Yes | Yes |
| Three sold comps | ARV | Value support |
| Scope + contingency | Yes | If value-add |
| Executed lease | For hold exit | Yes |
| Entity + OA | Yes | Yes |
| Liquidity statements | Yes | Yes + reserves |
Loan process · Fix and flip requirements
Step 3 — Negotiate on unusual collateral
Unusual for investors means: mixed-use, non-warrantable condo, 2–4 unit, manufactured, rural acreage. Ask upfront:
- Is this product in box or exception pricing?
- Who orders appraisal and what form (1004, 1025, 1004C)?
- Draw inspection cadence on rehab
Do not bind contract before you know in-box vs exception.
Step 4 — Ask about insurance and reserves
Investor insurance (landlord policy) — not HO-3. Some lenders require interest reserve or 6 months PITIA liquidity on low-credit or cash-out files. Model reserves in cash-to-close before you compare rates.
Step 5 — Request terms on every program you might use
If BRRRR: get bridge term sheet and written exit DSCR guidelines (seasoning, max LTV, min DSCR) from the same sponsor or coordinated lenders. Surprises at month 9 of a 12-month bridge are expensive.
Bridge now SBA later applies to owner-occupied commercial — not pure SFR flip.
Step 6 — Verify essentials (licensing, draws, extensions)
Non-negotiables:
- State licensing or lawful exemption disclosed
- Extension fee and max term in writing
- Draw timeline SLA (e.g. inspection + wire within 5 business days)
- Prepayment terms on bridge
- Canonical rate bands — quotes far outside 8.99%–13.5% / 5.75%–10.5% without deal-specific reason deserve scrutiny
Primary-home shoppers
If you need an owner-occupied mortgage lender, use a licensed broker — compare LE/APR, PMI, and FHA/VA eligibility. The six steps above target investment-property capital only.
Term sheet comparison worksheet
| Line item | Lender A | Lender B |
|---|---|---|
| Rate / points | ||
| LTC or LTV max | ||
| Extension (fee / max days) | ||
| Draw fee + inspection SLA | ||
| Prepayment | ||
| Interest reserve required | ||
| Guaranty scope | ||
| Total cost to modeled exit |
Fill this before appraisal payment — verbal “we are competitive” without line items is a red flag. Hard money application process.
BRRRR — align bridge and exit lender early
Before bridge close, confirm in writing:
- Seasoning from purchase date for DSCR exit
- Max LTV on cash-out vs rate-and-term
- Min DSCR on in-place lease vs market rent
- Whether as-completed or as-is value applies at refi
Misalignment forces extension at 8.99%–13.5% IO — often costlier than a slightly higher bridge rate with a clean exit path.
Document retention after you choose
Keep both term sheets, the signed note, draw schedule, and extension amendments in the deal folder — the next acquisition lender will ask how your prior sponsor performed on timelines. Switching lenders mid-portfolio without track record resets relationship pricing.
Relationship pricing after deal one
Repeat sponsors often get faster draws and cleaner exceptions when prior files closed on time with transparent inspections. When shopping lender two, reference closed loan history — not just social proof online.
Servicing and exit — ask before you sign
| Question | Why it matters |
|---|---|
| Who services the note? | Draw requests and payoffs route here |
| Can I refi with you at exit? | BRRRR path clarity |
| Transfer to another lender at payoff? | Some notes have fees |
| Default cure timeline | Before foreclosure referral |
Nationwide vs local lenders
Nationwide investor lenders (like Jaken Finance Group) underwrite to canonical bands across fifty states — local credit unions may not fund non-owner-occupied at all. Confirm business-purpose and investment occupancy before you fill a residential mortgage application by habit.
After you choose — onboarding checklist
- Single point of contact for draws and payoffs
- Portal or email for draw requests with photo standards
- Appraisal payment timing and refund policy if deal dies
- Extension request form and notice period (15–30 days typical)
Clear ops beat ¼ point savings when rehab timeline is tight.
Ask whether the lender sells the note after close — servicing changes mid-rehab can delay draw approvals if the new servicer onboarding is slow.
For DSCR, confirm prepayment penalty and yield maintenance on legacy debt before you order payoff — some CMBS-style notes surprise sellers at refi.
Referral-only lenders without published rate bands or state licenses deserve extra diligence — compare at least one transparent term sheet against any exclusive quote.
Document who at the lender approved exception pricing — verbal exceptions without email backup rarely survive secondary review.
Save declined term sheets too — they document market pricing when you negotiate the next deal.
Related resources
- What is hard money · DSCR hub · Case studies
- Pre-qualify · (833) 264-7776
6 Steps for Choosing an Investor Lender — next step (2026)
Run break-even on refi costs vs monthly savings and how long you plan to hold the home before you pay discount points.
Pre-qualify · Loan process · (833) 264-7776.
Rates, terms and conditions offered only to qualified borrowers and are subject to change at any time without notice. Closing times are in business days and commence upon receipt of appraisal payment and satisfaction of borrower conditions. Closing times may be delayed due to appraiser property access . All loans are subject to full underwriting for loan approvals. Jaken Finance Group only finances non-owner occupied investment properties.
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Jaken Finance Group, 2300 Barrington Road, Suite 400, Hoffman Estates, IL 60196