The Quick Read: Build one folder per property, then send your accountant the final signed settlement statement, the loan documents, the purchase contract, and a short note that explains what each paper shows. Your accountant uses these papers to sort every dollar paid at closing into purchase cost, loan cost, or operating expense. The loan qualified on the property’s rent, but your tax return still depends on this file.
- Send the final signed settlement statement, never an early draft or estimate.
- Add the note, the security instrument, the purchase contract, and any invoices paid outside closing.
- Keep entity documents and bank records matched to the exact name on the loan.
- Record the date the property was ready for rent, not just the lease start.
- Let your accountant decide tax treatment. Your job is a complete, labeled file.
What Is in a DSCR Closing Package?
A DSCR closing package is the stack of signed and issued papers from the day you buy or refinance. It includes the settlement statement, the promissory note, the mortgage or deed of trust, riders, the insurance binder, and title paperwork. The accountant needs some of these every year and others only once.
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DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. One practical result: the title company usually issues a final settlement statement rather than the consumer-mortgage disclosure form you may have seen on a home purchase. Whatever the page is called, the final signed version is the one that counts.
A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. That is why lender checklists focus on leases, rent evidence, and the property. They say little about taxes. Your accountant has the opposite need. Lender papers get you to the closing table. Accountant papers keep the next ten years clean.
Here is what the package holds and who issues each piece.
| Document | Who issues it | What it tells your accountant |
|---|---|---|
| Final settlement statement | Title or escrow company | Every dollar paid at closing |
| Promissory note | Lender | Loan amount, term, prepayment terms |
| Security instrument | Lender, recorded by title | Which property secures the loan |
| Purchase contract | You and the seller | Price, credits, concessions |
| Insurance binder | Insurance agent | Coverage start date and premium paid |
| Entity documents | Secretary of state, IRS | Which entity owns the property |
Which Papers Does Your Accountant Actually Need?
Your accountant needs the papers that prove cost, ownership, financing terms, and the date the property became a rental. Everything else is noise. A short, sorted package beats a giant folder of scans, because the accountant should not have to hunt for the three pages that matter.
Use three priority levels.
| Paper | Priority | Why |
|---|---|---|
| Final settlement statement | Send now | Source for basis and loan costs |
| Purchase contract and amendments | Send now | Confirms price and credits |
| Note and security instrument | Send now | Documents the debt |
| Payoff letter (refinance) | Send now | Shows the old loan ending |
| Fee invoices for bundled charges | Send now | Splits one charge into services |
| Insurance policy and escrow details | Send later | Supports expense tracking |
| Tenant ledger and lease | Send later | Shows rental start and income |
| Appraisal | Keep on file | Supports land and building split |
| Underwriting conditions, credit report | Keep on file | Lender-facing, rarely useful for taxes |
A word on the “keep on file” row. Lender-facing papers matter if a question comes up later, but forwarding them clutters the package. They can also contain personal details your accountant does not need.
How Do You Sort Each Line of the Settlement Statement?
Sort each line, not the total. Every charge on the settlement statement falls into one of three buckets: part of what you paid for the property, a cost of getting the loan, or a current or prepaid operating item. Your accountant makes the final call, but you can pre-sort to save time.
Bucket one: the cost of the property. IRS Publication 551 says your basis, which is your cost for tax purposes, includes settlement fees and closing costs for buying the property. Title and settlement fees, recording fees, transfer taxes, and a survey commonly sit here. If you paid real estate taxes the seller owed and were not reimbursed, those can also be part of basis, per the same publication.
Bucket two: the cost of the loan. Publication 551 also says fees for getting a loan cannot be included in basis. Points and origination fees land here. On a rental, IRS Publication 527 says points are prepaid interest that generally are deducted over the loan term, not all in the first year. That differs from how many people treat points on a home they live in. Whether a given lender fee counts as a point or as a separate loan cost is a question for your accountant.
Bucket three: operating items. Your share of current-year property taxes, prorated at closing, is generally treated as a current expense, as LandlordStudio explains. Escrow deposits work differently. Publication 551 says amounts placed in escrow for future taxes and insurance are not settlement costs. The deduction comes later, as the escrowed bills are actually paid.
Some lines are genuinely unclear. Prepaid per-diem interest and prepaid insurance are two. Mark them “needs your call” in the note rather than guessing. Seller credits belong on that list too, because they change what the property effectively cost you.
Tax treatment varies; consult a qualified professional.
How Should You Set Up the Folder?
Use one folder per property, with entity and loan subfolders where they apply. The goal is that a stranger could rebuild your purchase from the folder alone. A simple structure works.
- Entity (top level, if you hold through an LLC): formation documents, operating agreement, EIN letter, good standing certificate.
- Property folder, named by neighborhood or nickname plus purchase month:
- 01 Settlement statement (final, signed)
- 02 Purchase contract and amendments
- 03 Loan documents (note, security instrument, riders)
- 04 Fee invoices and wire confirmations
- 05 Insurance binder and policy
- 06 Land and building split support
- 07 Rental start evidence
- 08 Rehab invoices (kept apart from closing-day items)
- 09 Payoff letter and prior loan statement (refinances)
Name every scan the same way: property, document, and date. A file called “scan0034” costs your accountant billable time. Back it up in two places. Use the word “final” only on files that really are final.
Notice that the numbered list puts rehab invoices in their own folder. A repair paid after closing is a different question from a closing-day fee. Improvements are generally capitalized and depreciated, while ordinary repairs are handled differently. Keeping the invoices separate lets your accountant make that call.
What Changes for a Purchase, a Refinance, or a Cash-Out?
The paper trail grows as the transaction gets more complex. A purchase creates a new tax basis. A refinance creates a new loan and ends an old one. A cash-out adds a question about where the money went.
| Transaction | Extra papers to keep | Main question for the CPA |
|---|---|---|
| Purchase | Contract, earnest money record | What is my basis? |
| Rate-and-term refinance | Payoff letter, old loan statement | How are the old loan’s remaining costs handled? |
| Cash-out refinance | Payoff letter, final disbursement record | How were the proceeds used? |
On a purchase of an investment property, most files across the network land at 75%-80% LTV, and loan-to-value is the loan amount divided by the property’s value. That means your wire for the down payment, plus earnest money, should be documented. Keep the confirmations.
On a refinance, Publication 527 covers two situations. If the new loan is larger than the old balance, the part of the points tied to proceeds not used for the rental generally cannot be deducted as a rental expense. And if a loan ends, you may be able to deduct remaining unamortized points. Both outcomes depend on the paper trail, so keep the payoff letter and the prior loan’s settlement statement.
Cash-out files on standard rentals top out around 75% LTV across most of the network, with about six months of seasoning common. Seasoning is the waiting period between buying and refinancing. If you take cash out, save the final disbursement record and note where the money went. If you spend it on another rental purchase or on repairs, keep those records beside the cash-out file. Your accountant will want to trace the money. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
If you signed and then had second thoughts, Lendmire has a separate piece on whether you can cancel a cash-out refinance after signing closing papers.
A prepayment penalty paid on the old loan will show on the payoff statement. How to treat it is a CPA question, so flag it. Do not assume.
What If You Own Through an LLC?
Your closing papers, title, insurance, and bank accounts should all show the same entity name, subject to lender program eligibility. Mismatched names are a common reason a clean-looking file turns messy. If the deed says one entity and the insurance policy says another, your accountant has to ask which one owns the property.
An LLC checklist:
- The deed and settlement statement name the entity.
- The note and security instrument name the entity, with any guarantor signing as required.
- The insurance policy lists the entity as the named insured.
- Rent deposits go to an account titled in the entity’s name.
- The entity’s EIN letter is in the file.
- Closing funds came from an account you can document.
Your accountant also needs to know which entity files the return for which property. A one-line table at the top of your note handles it: property, owning entity, EIN. When you hold several properties in one entity, that table saves real time.
Keep personal and rental money apart.
How Do You Reconcile the Numbers Before Handing Them Over?
Open the final settlement statement beside the purchase contract and check that the two agree. Price, earnest money, seller credits, prorations, and the lender’s fees should all match what you expect. Any difference is a question to settle before the package leaves your hands.
Run these checks in order:
1. Does the purchase price on the statement match the contract and any amendments?
2. Does the earnest money match your bank record?
3. Do seller credits on the statement match what was negotiated?
4. Does each prorated item cover the right dates?
5. Does the loan amount match the note?
6. Are any fees charged twice?
7. Do the wire confirmations add up to the cash you brought?
Here is how a quick check can catch a problem. Say you bought a duplex at 75% LTV, which means the loan covered 75% of the price and you brought the remaining 25% plus costs. The cash you wired should land close to that 25% plus the fee total. If your bank records show less, something is wrong with a wire, a credit, or the statement itself. Call the title company and ask for the corrected version, in writing. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Order matters here. Get the fix before sending anything to your accountant. A corrected statement sent a month later invites two versions of the truth in two files.
Also confirm the placed-in-service date. Per Publication 527, depreciation on residential rental property is generally recovered over 27.5 years. It starts when the property is ready and available for rent, not when the first tenant moves in. Keep the listing date, the date make-ready work finished, and the lease start. All three help your accountant pin down the date.
Remember too that land is not depreciable. Your accountant needs a way to split the price between land and building. A tax-assessor breakdown or the appraisal allocation works. Put whichever you have in folder 06.
DSCR vs. conventional financing
There are two common ways to finance an investment property, and they qualify you differently — here’s how investors weigh them.
Why investors choose it
- Qualifies on the property’s rental income — no personal tax returns, W-2s, or pay stubs needed to document income.
- No personal debt-to-income ceiling to clear, so existing mortgages and obligations don’t cap your borrowing the same way.
- Can be closed in an LLC, keeping the property inside a business entity.
- Built for scaling — not held to the limit on number of financed properties that conventional financing applies.
- Underwriting centers on the deal: generally qualifies when the rent covers the payment, a 1.00x coverage ratio being a common baseline (confirmed in underwriting).
- Designed specifically for investment property, including long-term and, where the program allows, short-term rentals.
Where it’s strong
- Often the lowest ongoing financing cost for a buyer who fully qualifies on personal income — a fit for a first property or a cost-first purchase.
Trade-offs for investors
- Requires full personal income documentation and must fit within a debt-to-income limit — salary, existing debts, and other mortgages all count.
- Typically held in your personal name rather than a business entity.
- Caps how many financed properties you can carry, which can become a ceiling as a portfolio grows.
- Evaluates you as a borrower as much as the property, which usually means more paperwork.
How investors usually choose: a first or single property often optimizes for the lowest financing cost; portfolio builders often optimize for leverage, vesting in an LLC, and scaling past conventional caps. The right answer depends on your goals, the property, and current guidelines — both paths run through select lenders in Lendmire’s wholesale network, with eligibility and terms confirmed in underwriting.
What Should the Cover Note Say?
A good cover note is one page. It says what you bought, which entity owns it, which documents are attached, and which items you want a decision on. A vague note creates a phone call. A specific one creates an answer.
A fill-in template:
- Property: neighborhood, property type, number of units.
- Owner: entity name and EIN, or personal name.
- Transaction: purchase, rate-and-term refinance, or cash-out refinance.
- Closing date: the date on the final signed statement.
- Date ready for rent: and what supports it.
- Attached: a list matching your numbered folders.
- Questions for you: prepaid interest, seller credits, any prepayment penalty on a payoff, treatment of each lender fee, land and building split.
- Not yet available: anything still outstanding, such as a corrected statement or a year-end loan form.
The questions line is the part most investors skip. List the lines you could not classify. Your accountant will appreciate that you flagged them instead of silently guessing.
What Is the Timeline?
Do the first step at closing and the rest on a schedule you choose. Four checkpoints cover it.
- At closing: Collect the final signed statement and loan documents. Ask the title company for anything missing.
- First month after closing: Build the property folder, reconcile the statement, and send the package and note.
- Before year-end: Confirm insurance, escrow, and rent records are filed, and note any repairs or improvements.
- At tax time: Send the year-end loan statement and rent and expense totals for each property.
If a document never arrived, ask the title company or the loan servicer for a copy. If your broker arranged the loan, ask for help tracking it down. Do not wait until filing season.
Keep the whole file for as long as you own the property, and beyond. Basis records are what you use to figure gain or loss when you sell, so they need to outlive the sale year. A property held for a decade means a file more than ten years old.
Where Do Investors Go Wrong?
Most problems come from missing pages, unlabeled scans, and mixed money, not from complicated tax questions. These are the common ones.
- Sending the estimate instead of the final statement. Estimates change. Only the final document records what was paid.
- Assuming all closing costs are deductible. Many go into basis and are recovered through depreciation, as Publication 551 and Publication 527 describe.
- Assuming all closing costs go into basis. Loan-getting fees do not.
- Treating escrow deposits as expenses. They are not settlement costs.
- Mixing rehab invoices with closing-day items. Your accountant has to separate them.
- Skipping the land and building split. Without support, the depreciation number is a guess.
- Equating DSCR with cash flow. The coverage ratio compares rent to the full payment of principal, interest, taxes, insurance, and any association dues. Clearing 1.00 does not mean the property produces profit, because repairs, vacancy, management, utilities, and capital expenses sit outside the calculation. Your accountant needs the actual income and expense records.
- Assuming a loan that did not require tax returns means you need no records for your CPA. The loan file and the tax file are different tests.
The reserve statements you gave the lender also belong in your file. Reserves are cash set aside after closing, commonly around six months of the full monthly obligation across the network, though the number varies by lender, leverage, and loan size. They are not a tax item, but they show where funds came from if a question ever arises.
For a broader view of how these loans work, read the complete DSCR loans guide.
Key Terms Defined
- Basis: your cost in the property for tax purposes, which starts with the price plus certain closing costs.
- Placed in service: the point when a rental is ready and available for rent.
- Settlement statement: the final accounting of every dollar paid and received at closing.
- Security instrument: the recorded document, a mortgage or deed of trust, that pledges the property for the loan.
- PITIA: principal, interest, taxes, insurance, and association dues, the monthly obligation the rent is measured against.
- Seasoning: the waiting period a lender wants before you refinance or cash out a property.
Frequently Asked Questions
Do I send my accountant everything the lender sent me?
No. Send the final settlement statement, the note, the security instrument, the purchase contract, invoices for bundled fees, and your cover note. Keep credit reports, underwriting conditions, and similar lender-facing papers on file. Your accountant can ask for more.
What if I am missing a document?
Ask the party that issued it. The title or escrow company holds the settlement statement and recorded papers. Your loan servicer or broker can help with the note and loan documents. Request copies in writing and save the reply.
Does the DSCR loan show up on my personal tax documents?
It can, depending on how the property is held and how the loan is structured. A lender may send a year-end interest statement, and an entity-held property may report on the entity’s return. Tell your accountant which entity holds the loan so each form lands in the right place.
How long do I keep the closing papers?
For as long as you own the property and beyond the sale. Basis records are what you use to figure gain or loss, so they must survive until the filing period for the year of sale has closed. Keep digital copies in two places.
Should I send papers after a refinance as well?
Yes. Send the new settlement statement, the payoff letter for the old loan, and the old loan’s closing papers. On a cash-out, add the final disbursement record and a note on how the proceeds were used.
If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals. Lendmire is a broker that arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. Programs are subject to lender guidelines, and nothing here is a commitment to lend.
About Lendmire
Lendmire — NMLS# 2371349 — is a DSCR and non-QM mortgage brokerage with investor loan programs in 41 markets, including Washington, D.C. DSCR eligibility is commonly reviewed by the lender around property-level rent rather than personal income documentation, subject to lender guidelines, and the brokerage helps arrange financing for LLC-owned portfolios beyond conventional financed-property limits. Recognized by Scotsman Guide as a Top Mortgage Workplace in 2025 and 2026.
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References
1. IRS Publication 551, Basis of Assets
2. LandlordStudio, rental closing costs deductible
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Buy a Pittsburgh Rental With a DSCR Loan? · Can You Get a DSCR Loan on a Surfside Beach Rental? · Can a W-2 Employee Get a DSCR Loan on a Rental?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.