A final step before closing is the creation of the DSCR Loan documents. Most DSCR Lenders outsource this to a third-party law firm that specializes in preparing state-compliant mortgage packages for business-purpose loans. Instead of an individual attorney drafting documents from scratch, typically the basic loan and property information is inputted into a software template, and the loan document package is automatically generated fairly quickly. Because these docs are mostly templatized and little customization allowed, this process is generally quick and relatively cheap (can be done the same day clear to close is triggered and should cost no more than a couple hundred dollars). However, it's important to note that there are typically charges associated with redrawing loan documents in cases where the borrower tries to negotiate or changes terms after the documents have been drawn, so in these cases, if successful, will likely come at the cost of an additional, albeit minor, fee.
While most DSCR Loan closings are handled entirely by title companies, certain states require licensed attorneys to be involved in preparing or conducting the closing. For investors, these requirements can directly affect both the closing timeline and final settlement costs. However, there are several nuanced state-level laws that can cause DSCR Loan closings in several states to have additional attorney involvement in closing and loan document preparation and review, which can add some minor costs and additional days to the closing process.
In Texas, there is a state requirement for a “mandatory attorney review” for certain real estate loan transactions that require a licensed Texas attorney to review the loan documents before closing. This review always adds at least one business day between “Clear to Close” and the actual closing date. The cost for this service typically runs $150–$200 and is typically passed directly to the borrower as a settlement line item. DSCR Lenders and title companies plan around this rule, so it’s predictable, but investors in the Lone Star State should still budget both the extra day and the modest fee.
In New York, closings almost always involve attorneys for both buyer and seller, regardless of whether the loan is a DSCR Loan or a consumer mortgage. Borrowers can expect $1,500–$3,000+ in attorney fees, with higher costs for complex or multi-unit properties. The bigger risk for New York investors is timeline creep as these negotiations between multiple attorneys can stretch the process several days beyond what would be required in a title-only closing state.
In North Carolina, only licensed attorneys can prepare deeds, conduct closings, and disburse funds. Borrowers typically pay an extra $800–$1,200+ for these services, included in the closing costs. While this doesn’t usually extend the closing timeline beyond the norm, it means attorney schedules, not just lender and title, have to be accommodated.
In Georgia and South Carolina, the states require an attorney to conduct the closing, which can add $750–$1,500 to borrower costs. Scheduling can cause a 1–2 day delay if attorney calendars are tight, especially at month-end or in high-volume markets.
Massachusetts, Delaware, West Virginia also often require an attorney to be involved in real estate closings, including DSCR Loans. Costs can range from $800–$1,500, and timing is generally not affected unless out-of-state lenders must coordinate with local counsel for document adjustments.
If you’re investing in one of these states, borrowers should plan ahead for both extra line-item costs and potential closing delays tied to attorney involvement. In Texas, the delay is predictable (one extra business day), but in New York and other attorney-closing states, timelines can stretch if parties aren’t fully coordinated. Ask your DSCR Lender upfront if an attorney requirement applies and, if so, build the cost and time into your closing plan.
If you’ve closed a conventional or owner-occupied mortgage before, you may be used to strict federal rules under TRID (TILA-RESPA Integrated Disclosure). DSCR Loans don’t need to follow these rules because they are business-purpose loans, not consumer credit. This creates some important differences, particularly around Closing Disclosure Timing and Fee Changes (i.e. fee amounts from initial estimate to final amounts). In a TRID-regulated consumer mortgage loan closing, the mortgage lender must deliver a Closing Disclosure (CD) at least three business days before closing. A borrower can’t sign earlier, and certain last-minute changes trigger a new waiting period. For DSCR Loans, there’s no federal 3-day rule, a borrower might receive your final settlement figures the day before, or even the morning of, closing. While that speeds up the process, it also means borrowers must be ready to review quickly.
Additionally, under TRID, certain fees cannot change at all from the loan estimate to the Closing Disclosure (e.g., lender/broker origination fees), while others can only change within a 10% aggregate tolerance (e.g., title services, recording fees if you used lender-recommended providers) and some can change freely (e.g., prepaid interest, escrow deposits). For DSCR Loans, these tolerance thresholds don’t legally apply, and there may not even be an official “Loan Estimate” or “Closing Disclosure” even generated. While reputable DSCR Lenders aim to keep fees consistent with the initial quote, there’s no regulation preventing last-minute changes. This makes pre-closing review even more important, if something looks off, it should be flagged before closing.
Q: How long does it take to close a DSCR Loan?
A: Most DSCR loans close in 30 to 45 days from application to funding, though experienced investors with organized documentation and a cooperative appraisal process can sometimes close in as little as 3 weeks. Delays often happen due to appraisal scheduling, title issues, or slow entity document collection, so being prepared can speed up the timeline.
Up Next: Stage 8 of the DSCR Loan Process: Loan Closing and Funding!
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