DSCR Construction Loan Draws on Rental Builds

An investor building a duplex to rent brings two questions into one file. The construction lender asks whether the work is there. The exit lender asks whether the finished property will carry its debt. A DSCR loan is underwritten on the property's rent relative to its debt payments rather than on the borrower's income, so the permanent loan depends on a finished unit someone can lease.

Whether the exit is the same lender's term loan or a refinance elsewhere, every draw on the build is measured against that finish. This guide covers what changes in the draw process when the collateral is a rental. Sizing and underwriting the DSCR loan stay with the lender and its program.

Split the approved budget into lines for each unit (kitchens, baths, flooring, fixtures) and lines for shared work (foundation, framing, roof, site work and utilities). Inspections then report percent complete against both, and a reviewer can tell which unit a draw pays for.

The rest of the draw program is set at closing, as on any private construction loan: the construction holdback, the number of draws and their fees, whether draws are paid after the work is done, and any interest reserve that carries the loan until the units are leased. For banks, the Interagency Guidelines for Real Estate Lending Policies say disbursements on a loan that funds several phases of a project should not exceed actual construction outlays. Private lenders are not bound by them, though the same check protects their collateral.

The final draw on a rental build is where the two loans meet. Collect what any final draw needs: a final inspection, a certificate of occupancy where the jurisdiction requires one, the punch list and final lien waivers. The exit lender may also ask whether each unit is complete and ready to lease; its own program sets which documents it needs. A final inspection that documents each unit separately answers both lenders from one visit.

If the takeout is a refinance with another lender, the draw file is also the history that lender will read: what was built, when, and what each draw paid for. The guide to construction-to-permanent draws covers the single-close version of the same handoff.

Through the RAZE Marketplace, a two- to four-unit property is one inspection: $125 per single-family inspection plus $35 per additional unit (duplex $160, triplex $195, quadplex $230), at any U.S. address. With your own inspector, RAZE Direct Request is $25 per request.

Private lenders order draw inspections in the Ordering Engine and send each one to their own inspector through Direct Request or to a RAZE Marketplace inspector, at any U.S. address. The lender sets the required questions and photos, so a per-unit checklist travels with every order on every build. The inspector completes it in the RAZE Mobile App, where photos carry GPS coordinates and date and time stamps and link to the draw sheet line items they support.

The lender's reviewer accepts or rejects each submitted inspection, unless the institution has turned on auto-approve, a workflow setting rather than an AI decision. RAZE documents the work; the lender decides what to fund. Rental property inspections, such as a rent ready inspection, are coming soon. See draw inspections for private lenders.