The Quick Read: You replace a bank portfolio loan by taking out a new business-purpose loan that pays off every old note at closing, and at super jumbo size the new loan is underwritten on the rental’s income rather than your traditional personal-income documentation. The new payment, the loan-size band and the payoff cost of the old debt decide the outcome. Start with the old note’s terms, not the new lender’s pitch.
- Qualification runs primarily on property-level rental income covering the full payment, subject to lender guidelines.
- Leverage steps down as the balance rises, and cash-out stops above $3,000,000.
- At this size, credit, reserves and appraisals usually bind before the coverage ratio does.
- A fixed-term loan ends in a balloon, so the exit plan matters as much as the entry.
Lendmire is a DSCR-focused mortgage broker. It arranges these loans through a wholesale network of investor lenders in 41 markets, including Washington, D.C., and does not lend directly.
Key Terms Defined
- Bank portfolio loan: a loan the bank keeps on its own books instead of selling, which lets it set its own rules and make exceptions.
- Blanket loan: one note secured by liens on several properties. Here, “portfolio DSCR loan” and “cross-collateralized loan” mean the same thing. A bank’s portfolio loan is a different sense of the word.
- DSCR: monthly rent divided by the full monthly payment, meaning principal, interest, taxes, insurance and association dues.
- Super jumbo: an industry label with no official definition. Across our wholesale network, it starts at roughly $3,000,000.
- Balloon: a note that comes due before it fully amortizes, so a refinance or sale is built in.
- Release clause: a loan-document term that lets one property leave a pool for a set payoff.
- Yield maintenance: a prepayment charge that compensates the lender for lost interest.
Why Investors Replace a Bank Portfolio Loan
The usual trigger is a clock. A balloon is approaching, an adjustable reset is near, or the bank has tightened terms. Other triggers are quieter: the bank caps how many properties it will finance, lends only locally, or insists on personal income and global cash flow even though the rents carry the debt.
A bank loan on a rental is usually relationship-underwritten. That means personal income, deposits and often a personal guarantee. A DSCR loan flips the review basis. Qualification runs primarily on the property’s rental income covering the payment, subject to lender guidelines. That matters most for two investors: the one whose traditional personal-income documentation understates real cash flow, and the one with many financed properties.
Here’s the catch. Most DSCR underwriting on property income happens at non-bank lenders, so the swap usually means leaving the bank relationship entirely. Deposit ties, covenants and a bank’s discretion to tighten terms go away. So does the flexibility of a banker who knows you.
Should You Replace It at All?
Not every bank note deserves replacing. A loan near maturity is an easy candidate. A fixed loan with years left and no prepayment charge may be worth leaving alone.
| Your situation | Likely path |
|---|---|
| Balloon or reset within the next year or so | Replace, and start early |
| Years left on a favorable fixed note | Keep it |
| Bank caps your property count | Replace some or all |
| Rents are strong, traditional personal-income documentation is not | DSCR fits well |
| Planning to sell soon | Price the prepayment cost first |
| Need substantial cash-out above $3,000,000 | Super jumbo won’t deliver it |
Splitting is a real option. Some investors replace the notes nearing maturity and leave the rest where they are. That avoids paying off cheap debt just to tidy the file.
What “Super Jumbo” Changes
Size drives almost every other variable. The ladder below shows leverage by loan band. Every figure is a ceiling through select wholesale programs, subject to underwriting, and assumes coverage of 1.00 or better.
| Loan band | Purchase | Rate-and-term | Cash-out |
|---|---|---|---|
| $150K–$1M | 80% | 80% | 75% |
| $1M–$1.5M | 75% | 75% | 70% |
| $1.5M–$2M | 75% | 75% | 60% |
| $2M–$3M | 75% | 75% | 60% |
| $3M–$4M | 65% | 65% | — |
| $4M–$6M | 60% on review | 60% on review | — |
| $6M–$10M | 60% on review | 60% on review | — |
The bands are loan amounts, not purchase prices. Multiply price by leverage first, then read the band for that loan. The 70% cash-out cell applies to standard rentals here, not to short-term-rental collateral. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Credit is a separate gate. The program floor is 660 on loans to $3,000,000 and 700 above it. The top leverage in each band needs more: roughly 700 in the $1M–$1.5M band and 720 from $1.5M to $3M. A lower score takes a lower leverage cell in the same band. Above $3,000,000 the super jumbo overlay also adds 0x30x24 housing history, 48-month event seasoning, citizens and permanent residents only, no rural property, and no more than ten acres on a non-rural one.
Other requirements:
- Reserves are typically six months of payment on the subject property, 12 for first-time investors. Cash-out proceeds never satisfy them.
- Two appraisals are required above $2,000,000.
- Above $4,000,000, every request is reviewed case by case before submission, purchase or rate-and-term only.
That last point is the first cost of moving up in size. An investor refinancing a $4,000,000 bank note is trading cash-out for a different underwriting basis.
Term Loan or 30-Year Note?
Two blanket structures exist, and they solve different problems. Both are one note secured by several rentals. Figures below are ceilings or floors, never quotes.
| Factor | 30-year portfolio DSCR loan | Rental portfolio term loan |
|---|---|---|
| Properties | 2 to 20 | 5 or more properties or units |
| Loan size | $300K–$5M, larger on review | $500K–$50M, larger on review |
| Leverage | Up to 80% (purchase, rate-and-term) | Up to 75% |
| Term | 30 years, fixed or adjustable | Fixed 3, 5, 7 or 10 years |
| End of term | Fully amortizing | Balloon |
| Prepayment | Per loan documents | Yield maintenance |
| Recourse | Per loan documents | Recourse or non-recourse |
For a bank loan above $5,000,000, the term loan is often the structure that fits. It is also the only structure that accepts small multifamily of five or more units. The tradeoff is plain: you are swapping one balloon for another. A bank balloon forces a refinance in whatever market exists on that day. A 3-to-10-year term loan does the same, just later. If removing reset risk is the point, a 30-year note does that better, provided the balance and property count fit its limits.
Non-recourse versions of the term loan exist. They look to the real estate, with recourse limited to carve-outs such as fraud and bankruptcy. A recourse version carries a personal guarantee. Read which one you are being offered.
For single-property comparisons, Lendmire’s piece on super jumbo non-QM versus a regional bank ARM for an LLC portfolio investor covers a different decision: one loan, one bank alternative.
The Replacement Process, Step by Step
1. Inventory the bank debt. Pull every note. Check maturity, balloon or reset language, prepayment terms, recourse and covenants. Bank loans often carry no prepayment charge, but the note must say so.
2. Test the coverage. Divide monthly rent by the full monthly payment. A reading of 1.00 means rent equals the payment. On a blanket loan, coverage is total rent over total payment across the pool, so a strong property can offset a weak one. That is a pooled-coverage fact, and underwriting tests the pooled coverage, the leverage and the terms.
3. Size against the ladder. Find the loan band, then the leverage, credit and appraisal count that go with it.
4. Assemble documents. Expect a lease or appraiser-supported market rent, an appraisal per property, entity documents, asset and reserve statements, and a business-purpose attestation.
5. Settle structure. Choose pooled or single-asset, term or 30-year, recourse or not. If several properties secure the loan, ask for release terms before signing. Partial releases, substitutions and one-property sales follow the loan documents, and the remaining pool must still cover its payment.
6. Close and pay off. The new loan pays every old note through title or escrow. You then make one payment.
7. Plan the exit. A fixed term ends in a balloon. Know your refinance or sale path before you sign.
Recent rehabs deserve a warning. Inside the first six months of ownership, the loan is also capped at 90% of total cost (purchase price plus documented improvements), and at 100% of total cost from six to twelve months. The leverage ceiling still applies, so the loan is the lower of the two. After twelve months, appraised value alone is the basis. A rate-and-term refinance is not subject to the cost-basis cap.
Working Through a Thin Pool
Picture an investor with a mixed pool: most rentals cover comfortably, and a couple sit below 1.00 on their own. On a pooled loan, the strong properties can lift the group. Say the pooled coverage lands near 1.15x. A single-property DSCR loan on each weak rental would struggle. This illustration is modeled, not a market statistic.
The danger runs the other way. Cross-collateralization ties every property to the whole debt. One weak asset can hold back a sale of the strong ones, because the remaining pool must still cover. Splitting into two pools can protect the strong group but leaves the weak one exposed.
When coverage is thin, the common fixes are:
| Problem | Likely fix |
|---|---|
| Pooled coverage under the floor | Drop the weakest asset from the pool |
| Leverage too high for rent | Lower the loan amount |
| Payment too heavy | Interest-only period, up to 120 months on 30- and 40-year terms, 75% maximum |
| Single property below 1.00 | A select program may review it at reduced leverage (LTV and terms adjust, subject to underwriting) |
Interest-only on single-property loans is reviewed on interest, taxes and insurance, with coverage of 0.75 or better.
Payoff Cost and Break-Even
The cost of leaving the old loan is only half the math. The new loan’s exit cost falls on the entire pool.
Yield maintenance is the one to price. Nasdaq describes it as a prepayment penalty based on the present value of the interest the lender loses. Adventures in CRE explains that it discounts remaining cash flows at a benchmark such as a government bond yield, then subtracts the balance. So it floats with Treasury yields, is hard to predict, and is typically larger when yields have fallen. It is not a flat fee.
On the rental portfolio term loan, yield maintenance runs 54 months on the 5-year note and 114 months on the 10-year note. A sale inside that window is where the cost bites. If a sale may come soon, a 30-year note or a shorter term deserves a hard look.
A simple worksheet: list the old note’s payoff and any prepayment charge, list the new loan’s exit cost over your expected hold, and compare the two. If you plan to hold through the term, the exit cost matters less. If a sale is likely, it can decide the whole question.
Entity, Guaranty and Bank-Relationship Changes
Entity vesting is welcome, but layered entities are not. Some structures require a special-purpose entity, typically an LLC, subject to program terms. Ownership documents must match across every property in the pool.
Guaranty changes too. Many bank notes carry a personal guarantee. A non-recourse term loan replaces that with carve-outs. A recourse loan keeps the guarantee.
Then there are the ties people forget: deposit requirements, credit lines and cross-default language connecting the old note to other bank accounts. Check these before you pay off a note, because removing one loan can trigger changes on another. A pledged-asset or securities-backed line is a different case entirely. The bank can call it when the portfolio value drops, and only the property-related portion pays off cleanly.
Across our wholesale network, the file that stalls is rarely the one with thin coverage. It is the one with a surprise in the old bank paperwork: an unreleased lien, a covenant tied to a deposit account, or entity names that don’t match across properties. Pulling the full loan file before applying prevents most of it.
Where the Rule Breaks
Several edge cases change the answer:
- Owner-occupancy. DSCR loans are for non-owner-occupied investment property. They are business-purpose loans, reviewed differently from a standard owner-occupied mortgage. The CFPB’s Truth in Lending summary treats credit to acquire a non-owner-occupied rental as business-purpose credit. A property you plan to live in does not fit.
- Ineligible property. Owner-occupied homes, co-ops, mixed-use and commercial property are out of the pool. Manufactured and mobile homes are not reviewable on these programs.
- Short-term rentals. They qualify on documented operating history at 80% of gross, with loans to $2,000,000. Municipal permission is documented per property, and short-term rental rules can vary by city, county, HOA and property type.
- Above $4,000,000. Everything is case by case.
- Cash-out on a portfolio loan. It never exceeds 75% of pooled value.
Tax treatment varies; consult a qualified professional.
What the Decision Looks Like
Run three tests in order. First, does the old note’s clock or covenant structure justify action? Second, does the loan band leave you the leverage and cash-out you need? Third, does the exit cost on the new loan fit your hold plan?
If the answers favor replacement, the next step is a file review, not a rate chase. For a related decision on a different asset type, see Lendmire’s comparison of a super jumbo DSCR loan versus a regional bank condo loan. The complete DSCR loans guide covers the underlying mechanics.
If you are buying or refinancing a high-balance rental property and want to see how the numbers work, Lendmire can help you compare super jumbo DSCR loan options based on the property income, the loan balance, credit profile, leverage and investor goals. Reach the team at 828-256-2183.
Frequently Asked Questions
Is replacing a bank portfolio loan a refinance or a conversion?
It is a refinance. The new loan is a separate note with its own appraisal, title work, insurance review and credit check, and it pays off the old one at closing. Nothing converts in place.
Does a bank portfolio loan have to be a blanket loan?
No. A bank portfolio loan is simply one the bank keeps on its books. It can secure one property or many. A blanket loan is one note secured by several properties, and it can be held by a bank or placed elsewhere.
Can I take cash out when I replace it?
Up to $3,000,000, yes, at reduced leverage. Cash-out runs 75% to $1,000,000, 70% to $1,500,000 and 60% to $3,000,000 on standard rentals, subject to underwriting. Above $3,000,000 there is no cash-out, and proceeds are capped at $1,500,000 when leverage exceeds 60%.
Is “super jumbo” a regulated category?
No. It is a lender label with no legal definition, and the cutoff varies. Within Lendmire’s network it starts at roughly $3,000,000.
What if rent doesn’t cover the new payment?
You have options, but each costs something. Select programs review coverage from 0.75 to 0.99 at reduced leverage through $2,000,000, with LTV and terms adjusting, subject to underwriting. Others include a lower loan amount, an interest-only period, or removing the weak property from the pool.
Lendmire’s self-employed mortgages page presents both super jumbo programs, bank statement and DSCR, side by side.
About Lendmire
Lendmire (NMLS# 2371349), a non-QM mortgage broker serving investors in 41 markets including Washington, D.C., helps structure DSCR scenarios commonly evaluated around a property’s rental income rather than personal income paperwork, subject to lender guidelines. A Scotsman Guide Top Mortgage Workplace in 2025 and 2026, Lendmire places loans through wholesale investor lenders and is not a direct lender.
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References
1. Nasdaq, What Is Yield Maintenance
2. Adventures in CRE, Yield Maintenance
3. CFPB’s Truth in Lending summary
This article is part of Lendmire’s super jumbo DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get a Super Jumbo DSCR Loan on a Luxury Airbnb? · Can Art or a Yacht Be Pledged on a Super Jumbo DSCR Loan? · Super Jumbo DSCR vs Bank Statement Loan for a Condotel
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.