How Do I Finance a Florida Real Estate Purchase Through an LLC or Corporation?
Conventional residential mortgages are not available to LLCs or corporations. Here are the financing options for entity buyers — DSCR loans, portfolio loans, and the personal-name-to-LLC strategy.
How Do I Finance a Florida Real Estate Purchase Through an LLC or Corporation?
Conventional residential mortgages (Fannie Mae/Freddie Mac) are not available to LLCs or corporations. If you want to purchase Florida real estate in an entity's name, you have several financing options.
Option 1: DSCR Loans (Most Common for Vacation Rentals)
DSCR (Debt Service Coverage Ratio) loans are designed for investment properties and are available to LLCs and corporations. Qualification is based primarily on the property's rental income rather than the borrower's personal income.
How DSCR qualification works:
- The lender calculates the property's DSCR: annual rental income ÷ annual debt service (principal + interest + taxes + insurance)
- A DSCR of 1.0 means rental income exactly covers the debt service
- Most lenders require a DSCR of 1.0–1.25 or higher
Pros:
- Available to LLCs and corporations
- Qualification based on rental income, not personal income
- No personal income documentation required
Cons:
- Higher interest rates than conventional loans (typically 1–2% higher)
- Higher down payment requirements (typically 20–25%)
- Not available for properties with no rental history
Option 2: Portfolio Loans
Some local and regional banks offer portfolio loans — loans they hold on their own books rather than selling to Fannie Mae/Freddie Mac. Portfolio lenders can set their own underwriting standards and may lend to LLCs.
Pros:
- More flexible underwriting than conventional loans
- May offer competitive rates for strong borrowers
Cons:
- Less widely available
- Terms vary significantly by lender
Option 3: Personal Name Purchase + LLC Transfer
Buy in your personal name with conventional financing, then transfer the property to an LLC after closing. This is the most common approach for buyers who want conventional financing and LLC ownership.
Pros:
- Access to conventional financing rates
- Achieves LLC ownership after closing
Cons:
- Due-on-sale clause risk (see our post on transferring a mortgaged property to an LLC)
- Requires legal work to execute the transfer properly
Option 4: Cash Purchase
Many entity buyers pay cash and avoid the financing issue entirely. This is common for buyers who are using proceeds from a prior sale or have liquid assets available.
FAQ
What is a typical DSCR loan rate compared to a conventional loan?
DSCR loan rates are typically 1–2% higher than conventional loan rates. The exact spread depends on market conditions and the lender.
Can I use rental income projections (not actual history) for a DSCR loan?
Some lenders will use projected rental income from a management company for new purchases. Others require actual rental history. Ask your lender about their requirements.
Do I need a personal guarantee for an LLC loan?
Most DSCR lenders require a personal guarantee from the LLC members, even though the loan is in the LLC's name.
Looking for DSCR or portfolio financing for your Emerald Coast LLC purchase? I can connect you with lenders who specialize in this market.
— Kinsey Haddock P.A., Broker Associate | Coldwell Banker Realty — Panhandle | License #BK3253849
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Kinsey Haddock · Coldwell Banker Realty
Whether you're buying, selling, or just exploring your options on the Emerald Coast, I'm here to answer every question — no pressure, no obligation.
Written by
Kinsey Haddock P.A.Kinsey Haddock P.A. is a Broker Associate and REALTOR® with Coldwell Banker Realty, specializing in coastal real estate across the entire Florida Panhandle — from St. George Island and the Forgotten Coast to Panama City Beach, Scenic Highway 30A, and Destin.