The Quick Read: Usually yes, but it is a brand-new loan that pays off the bank note at closing, not a conversion or an extension. The new lender looks mainly at whether the rent covers the new payment, and the old payment history matters little.
- Coverage, equity, credit and the cost of exiting the old loan decide the outcome.
- The 30-year portfolio DSCR loan removes the balloon. The rental portfolio term loan, with 3-, 5-, 7- or 10-year terms, still has one.
- Rent qualifies the file, subject to lender guidelines. Credit, reserves, appraisal and entity review still apply.
- Check the old note for prepayment terms before you plan anything else.
Key Terms Defined
DSCR (debt service coverage ratio): monthly rent divided by the full monthly payment on the property. That payment is principal, interest, taxes, insurance and any HOA dues, known as PITIA.
Balloon: a lump sum due at the end of a loan’s term because the payments never paid the balance down to zero.
Portfolio DSCR loan: one note secured by several rentals. “Blanket loan” and “cross-collateralized loan” mean the same thing.
Bank portfolio loan: a different sense of the word. The bank keeps the loan on its own books instead of selling it.
Rate-and-term refinance: a new loan that replaces the old balance without pulling equity out.
Interest-rate swap: a derivative hedge that big borrowers sometimes use. It is not what this article covers.
What Does the Swap Actually Involve?
You are not converting anything. You are applying for a new loan on the same rentals, and the proceeds pay off the bank at closing. That means a new appraisal, new title work, a credit review and entity documents.
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.
The swap does not run on your relationship with the bank. It runs on the property. A file qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. That is a real help if you are self-employed or your traditional personal-income documentation shows heavy write-offs.
It does not mean no underwriting. Lenders still review credit, assets, the appraisal and the entity. Across the wholesale network Lendmire works with, the programs that fit a bank-note swap differ mainly in how many properties go under one note and how long the fixed period runs.
Does a Long Fixed DSCR Note Really Remove the Balloon?
Only one of the two portfolio structures removes it. The 30-year portfolio DSCR loan is fully amortizing, so no lump sum comes due. The rental portfolio term loan is fixed for a set term and ends in a balloon.
| Feature | 30-year portfolio DSCR loan | Rental portfolio term loan |
|---|---|---|
| Properties | 2 to 20 | 5 or more properties or units |
| Loan size | Typically $300K to $5M | Typically $500K to $10M |
| Max leverage | Up to 80% on purchase, rate-and-term | Up to 75% of value |
| Term | 30-year term, 30-year schedule | Fixed 3, 5, 7 or 10 years |
| Balloon | None | Yes, at maturity |
| Interest-only | Available | Not a feature |
| Property types | SFR, 2-4 unit, condo, townhome | Adds small multifamily |
Larger balances on either structure are reviewed case by case. Every figure is a ceiling or floor through select wholesale programs, subject to underwriting.
Lendmire’s piece How to Move a Maturing Bank Loan Into a Long-Term DSCR Portfolio Loan walks through the 30-year structure in more detail.
One warning. Some people assume every DSCR product is balloon-free. It is not. Read the term and the amortization schedule, not just the word “fixed.”
How Does the Coverage Test Work on the New Payment?
The lender tests the new payment, not the old one. On the 30-year portfolio loan, the floor is 1.00 measured on the pool, meaning pooled rent against pooled debt service.
Run it this way. Say you hold three rentals with a mix of strong and weak coverage. Two clear 1.25x on their own, and one sits at 0.90x because a tenant just left. Those are modeled assumptions, not market data.
A rental below 1.00 can sit in the pool, and underwriting tests the pooled coverage, the leverage and the terms. If the pool clears 1.00, the weak property rides along. That is the real advantage over three separate loans, where the weak one might be turned away alone.
The new payment is also what changes your math. A bank note with a short amortization may have carried a heavy payment. A 30-year schedule, or an interest-only period where available, usually changes coverage a lot. Run the new numbers before you assume the old ones tell you anything.
Every property in the pool still needs a lease or an appraiser-supported market rent. Credit floors on the portfolio programs typically start at 640, and some structures ask for 680 or 720. A special-purpose entity, typically an LLC, is required on some structures, per program requirements.
What Are Your Options When the Note Matures?
The swap is one of several paths, and it is not always the right one. This table sets them side by side.
| Option | Best for | Main risk |
|---|---|---|
| Renew or extend with the bank | Cheap bank terms, strong relationship | Another short fuse |
| Swap to a 30-year portfolio loan | Long hold, pooled rents | Prepayment clock on new loan |
| Swap to a rental portfolio term loan | 5+ properties or units, larger balances | Balloon returns at maturity |
| Split into one loan per property | Mixed-quality portfolio | Weak property may not qualify alone |
| Sell or pay down | Exit or deleveraging | Lost income, cash needed |
For a closer look at the term-loan path, see Lendmire’s article How to Refinance a Maturing Portfolio Loan Into a Long Fixed DSCR Term.
Working Backward From the Maturity Date
Start the process well before the date. The more time you have, the more room you have to fix a coverage problem. One CRE advisory firm, citing Mortgage Bankers Association figures, recommends starting nine to twelve months before maturity.
The same source reports, as MBA data, that about $875 billion, or 17% of outstanding commercial mortgages, matures in a single year. That wall is mostly large commercial and multifamily debt. Small investors face the same pattern in miniature, since community-bank investor loans often reset or balloon after a few years.
Here is the order that works:
1. Read the note. Find the maturity date, balloon or reset terms, any prepayment charge, and any recourse or deposit ties.
2. Compute coverage. Rent divided by the full payment, tested on the new structure.
3. Choose the structure. One pooled note or one loan per property.
4. Gather documents. Entity papers, insurance, asset statements for reserves and closing funds, and leases.
5. Order the appraisal. It includes a rent schedule.
6. Close with a payoff. Title wires funds to the old lender, and any old prepayment fee shows up as a line on that payoff.
What if the date arrives first? Ask the bank for an extension or forbearance before it passes, not after. Banks can say no, but a documented refinance in progress gives you a stronger conversation.
The regulator’s warning applies here. The Consumer Financial Protection Bureau notes that you may be able to refinance before a balloon comes due. It also warns that a drop in property value or a weaker financial position can prevent it. That page is framed for residential borrowers, so use it for how balloons work and the refinance risk, not as a ruling on investor loans.
What Can the Old Loan Cost You?
Check the old note first. Bank loans often have no prepayment charge, but you must read the document. If one exists, it becomes a line item on the payoff.
A soft penalty may exempt a sale but not a refinance. Seasoning and a prepayment clock are separate tests, and many people mix them up.
Three other items deserve a look:
- Consent and lien release. Paying off the bank note releases its lien. With several notes, title can pay them all at one closing.
- Guarantor changes. Bank underwriting often leans on a personal relationship and guarantee. The 30-year portfolio loan can carry recourse. The rental portfolio term loan comes in recourse and non-recourse versions, where non-recourse looks to the real estate with carve-outs such as fraud and bankruptcy.
- The new clock. Expect the new loan to carry its own prepayment terms. The term loan uses yield maintenance. Read those terms before you sign, because a long note you may sell out of in two years is a different decision than one you hold.
If the Numbers Don’t Clear
Work through these in order:
1. Raise or fix rents. A vacant or underpriced unit often drags the pool down.
2. Pull the weak property. Leave it with the bank or sell it, and refinance the rest.
3. Lower the ask. Leverage often binds before coverage does, especially if values have slipped. A lower loan amount may get you across.
4. Try an interest-only period. Where available on the 30-year structure, it changes the payment that coverage is tested against.
5. Look at select lower-coverage programs. Programs below 1.00 coverage exist through select lenders in the network, and LTV and terms adjust, subject to underwriting. A single-property DSCR loan with no-ratio qualification also exists through select wholesale programs, subject to underwriting. It is not the portfolio structure.
6. Sell or pay down. Sometimes that is the honest answer.
When Not to Swap
Keep the bank loan when its terms are better and the maturity is still far off. Keep it when a renewal is on the table at terms you like. Keep it when the portfolio is small and the balloon risk is manageable.
Also keep it if you plan to sell soon. A new prepayment clock and fresh closing costs make a short hold expensive. Run a break-even before you move.
This one is a genuine judgment call. A long fixed note buys certainty, and certainty has a price. Investors who plan to hold for years usually value it more than those who flip.
Edge Cases That Change the Answer
Five or more units. Small multifamily of five or more units is eligible only inside the rental portfolio term loan, which carries a balloon. It is not eligible on the 30-year portfolio structure or on a single-property DSCR loan.
Recently bought property. 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, and the loan is the lower of the two. After twelve months, the appraised value alone is the basis. A rate-and-term refinance is not subject to the cost-basis cap.
Cash-out. A cash-out on a portfolio loan never exceeds 75% of the pooled value, and never exceeds the structure’s own ceiling. It is available only on seasoned properties. Payoff, costs and reserves come out first, so cash-out does not guarantee cash in hand. Tax treatment varies; consult a qualified professional.
Owner-occupied or mixed-use buildings. These are ineligible in the pool, along with co-ops and commercial property. If you run your own business out of the building, SBA 504 and 7(a) loans are the usual alternatives, as one maturity-wall guide describes in general terms.
Partial releases. Selling one property out of the pool follows the loan documents and the lender’s release terms. The release price runs above that property’s allocated balance, and the remaining portfolio must still cover its debt service.
Frequently Asked Questions
Is this a conversion or a new loan?
A new loan. The lender runs a fresh appraisal, title work and credit review, and the proceeds pay off the bank note. Nothing about the old loan carries over except the collateral.
Can an LLC borrow?
Yes on most structures, subject to program terms. Some portfolio structures require a special-purpose entity, typically an LLC. Entity vesting is common on investor files, but layered entities are not.
Does a 30-year fixed always mean no balloon?
No. The 30-year portfolio DSCR loan has a 30-year schedule and no balloon. The rental portfolio term loan is fixed for 3, 5, 7 or 10 years and balloons at the end. Check the term, not just the label.
Do I have to pool my properties, or can I split them?
You can split. One DSCR loan per property works when each rental clears coverage on its own. Pooling helps when one property is weak and the rest are strong, since the pool is tested together.
Can I pull cash out at the swap?
Sometimes, on seasoned properties, up to 75% of the pooled value and never above the structure’s own ceiling. Subject to underwriting, the payoff and costs come out of proceeds first. A plain rate-and-term swap carries higher leverage, up to 80% on the 30-year structure.
Next Step
If you are buying or refinancing a rental portfolio and want to see how the numbers work, Lendmire, a DSCR-focused mortgage broker arranging business-purpose investor loans in 41 markets, including Washington, D.C., can help you compare options based on property income, loan balance, credit profile, leverage and investor goals. Lendmire’s complete DSCR loans guide covers the basics if you want them first.
Most bank notes that mature this way do not fail on coverage, they fail on timing, so the investors who read the old note early are the ones with options left.
For current guidelines and terms, see Lendmire’s super jumbo DSCR loan programs page.
Lendmire’s self-employed mortgages page presents both super jumbo programs, bank statement and DSCR, side by side.
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. Banyan CC – CRE maturity wall
2. CFPB – What is a balloon payment?
3. Beancount.io – Maturity wall guide
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: How to Add a Fixed Second Lien Behind a Super Jumbo DSCR Loan · Can Your Parents Be the Tenants on a Super Jumbo DSCR Loan? · Super Jumbo DSCR Loan Guidelines for an LLC Portfolio Owner
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.