November 17, 2025 | 3 Minute Read
Many investors come to me for help securing bridge and refinance loans—usually when they reach the third R in the BRRRR strategy: Refinance. That third R is the turning point. It determines whether your capital stays trapped in a property indefinitely or gets recapitalized into acquiring more deals.
Unless you have unlimited funds, mastering the refinance step is essential.
But before you ever write an offer, you must ask yourself the most important question in the entire BRRRR process:
“Will I meet a lender’s minimum requirements when it comes time to refinance this property?”
Every lender has different programs and conditions. If your initial numbers don’t support a full cash-out refinance, you risk tying up capital, bringing cash to closing, slowing your growth, and losing the ability to scale.
To see why this matters, let’s walk through a common scenario.
A Typical BRRRR Scenario
You buy a property for $20,000 and put $30,000 into renovations. It rents for $700/month, and you estimate the ARV to be $75,000.
Your goal:
Qualify for a bridge loan now and a DSCR refinance later.
Before running the numbers, you need to know the minimum lender requirements for a fix and flip loan.
Minimum Lender Requirements
1. Loan Amount
Most lenders have a minimum loan amount, often $75,000. Since that generally represents 75% LTV, your property must appraise for $100,000+ to qualify.
Small, single-asset loans under this threshold are often declined for a bridge loan.
2. Experience Level
If you’ve only completed a few deals, lenders usually reduce leverage by 5%.
Instead of 75% LTV, you may be capped at 70%. You can still get funded—but you may not recover all your capital at closing.
3. Credit Score
This is critical.
660+ required for approval
700+ for maximum LTV
Below 660 → loan denied
Even if the deal works on paper, low credit can stop it cold.
4. DSCR Requirements
A DSCR loan is underwritten based on the property’s ability to cover its mortgage payment—not your personal income. Most lenders require a minimum 1.0–1.2 DSCR.
If your DSCR falls below their minimum, they will lower your LTV until the ratio meets guidelines, reducing the cash you can pull out.
Bridge Loan Outcome
Your total project cost is $50,000. Most lenders require $75,000+ combined purchase and rehab for a bridge loan. They will give you 90% of LTC ($18,000) and 100% ($55,000) of renovation funds.
Conclusion: You won’t qualify for a bridge loan because your total loan amount is only $73,000. You’ll need personal funds, private money, or a partner.
Let’s assume you self funded and are now ready to refinance.
Scenario #1: Loan Amount
Your property has an ARV of $75,000.
75% LTV would give you $56,250, but the lender requires a minimum loan amount of $75,000—not a property value of $75,000.
Result:
You still do not qualify. There simply isn’t enough value.
Scenario #2: DSCR
Let’s assume the ARV comes in at $100,000 instead.
Your investment is $75,000 total
75% LTV gives you $75,000, which matches your cash-out goal
But rent is only $700, producing a DSCR of 1.07
To meet their minimum DSCR, the lender drops your LTV to 70% or less.
That means:
You only qualify for a $70,000 loan amount
You have $75,000 invested
You must leave $5,000 trapped in the deal
Add closing costs, and you’re $10–12K out of pocket
Yes, some lenders allow lower DSCR—but expect a higher interest rate, which eats into cash flow.
Scenario #3: Credit Score
Everything looks good—until underwriting pulls your credit.
You assumed your score was 710, but it comes back 650.
Possibilities:
You used credit cards heavily during renovations
You haven’t paid down balances yet
Even if the deal works financially, a low score kills the loan unless you can pay off the credit card debt and raise your score to the 660 to 700 range
Scenario #4: Requirements Met
Bridge Loan:
Purchase price: $20,000
After Repair Value (ARV): $140,000
Renovation costs: $60,000
Loan Structure:
Purchase funding: $27,000 ($30,000 × 90%)
Renovation funding: $55,000
Total loan amount: $82,000
Refinance Loan:
ARV: $140,000
New loan: $105,000 (75% of ARV)
Less: Payoff of bridge loan with interest: $87,000
Less: Closing costs: $12,000
Net cash to you at closing: $6,000
The BRRRR strategy works only when the refinance step is executed flawlessly. Before you ever submit an offer, you must analyze the deal through the eyes of a lender. Minimum loan amounts, DSCR, credit score, ARV, and your experience level all determine whether you walk away with 100% of your capital—or have funds tied up indefinitely in the refinance.
The investors who scale the fastest are the ones who plan their refinance before they buy, ensuring the property meets the lender’s guidelines. Only then can the investor be on the right path to succeed with the BRRRR strategy.