Real estate investors face more misinformation about lending than almost any other topic. From DSCR loans to fix-and-flip financing, myths can lead to missed opportunities, slower approvals, and unnecessary fear. This guide breaks down the most common myths and reveals the truth behind them.
1. Myth: Investment Loans Require Personal Income
DSCR loans and private loans rely on property income or asset value—not W-2s or tax returns.
Income is nearly irrelevant in investor financing.
2. Myth: You Need Perfect Credit
A score in the mid-600s can qualify for many programs.
Lenders care more about payment behavior, liquidity, and DSCR strength.
3. Myth: LLCs Guarantee Approval
LLCs help with structure, but lenders still underwrite the operator.
Personal credit and liquidity still matter.
4. Myth: Private Lending Is Too Expensive
Private capital buys speed, flexibility, and access to deals you can’t win with banks.
Cost must be measured against opportunity.
5. Myth: Cash-Out Refinancing Is Dangerous
Cash-out refinancing is a common growth strategy and is tax-free.
Risk depends on deal quality, not the refinance itself.
6. Myth: BPOs and Appraisals Are the Same
Appraisals are more detailed and regulated.
BPOs are faster and cheaper, used for speed-sensitive lending.
7. Myth: Loan Conditions Mean Something Is Wrong
Conditions are normal. They clarify documents and finalize underwriting.
Clean files get fewer conditions. Sloppy files get many.
8. Myth: You Only Need Documents After Finding a Deal
Prepared investors keep documents ready at all times.
This leads to faster pre-approvals and stronger offers.
9. Myth: Lowest Rate = Best Loan
Investors should focus on speed, leverage, DSCR, and total economics—not just interest rate.
Final Thoughts
Investment loan myths can hold investors back from scaling their portfolios and seizing good deals. Understanding the truth helps you position yourself as a confident, knowledgeable borrower who works with lenders—not against them.
When you replace myths with facts, borrowing becomes simpler, faster, and far more profitable.
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