15% Down DSCR Loan Specifically for STR

Rental Property Investor · Carnation, WA · Member since 2021 · 10 posts · 9 votes

Can anyone recommend or underwrite a 15% down DSCR loan based off short term rental income? I'm looking for a 30 yr Am, and someone that can close fast enough to be competitive in a hot market. No prepayment penalty would be a huge bonus as well. Still narrowing down a market, but TN, NC, GA, TX.

I've got access to a 20% down dscr, but looking to increase my buying power to 800K-1M purchase price.

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Jay S.Pro Member

Lender · San Francisco Bay Area · Member since 2019 · 52 posts · 46 votes

Hi Anthony, will DM you and give details. We have few lenders which can make exception and provide 15% down on DSCR loan.

[email protected]408-832-8200

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Jay HurstBusiness Member
Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
4y
Quote from @Carrie Matuga:

@Jay Hurst is the debt service ratio based on short term rates or long term rentals?

The 15% would be based on the 1007 market rent schedule in the appraisal. So, in markets were STR is really all there is if the appraiser does a good job in documenting that in the 1007 STR can be used. However, that data is much harder to track down so you would likely have to qualify with a less rental income then you think you might be able to generate.
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Melissa Claypool
Member since 2020 · 5 posts · 4 votes
4y
Well now the Lender says (after I signed a Disclosure for 15% down) that they have suspended all 15% down loans so now I have to come up with more money down to be 20% down. They also charged over $700 for an appraisal saying due to demand the price is higher now. When they called me about the suspension of the 15% down (and now want me to sign a new loan disclosure) they said the appraisal has also increased to over $1010.00 because the appraisal company thinks the area is in the mountains. It is just outside of Asheville. - less than 20 min. Can they change the down payment agreement and has anyone else been seeing the appraisal at this amount? In January I was charged over $400 for an appraisal but had to back out of the purchase due to issues brought up by the inspection.
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Jonathan Taylor
Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes
4y
@Anthony Spencer wouldn't we all like that but the truth is we work with the programs out there. You can't have your cake and eat it too. 15% down with no form of PPP is a lot to ask. Run numbers at 20% down and if you can find a 15% down for STR post it up but my lenders are 20-25% down for STRs with min interest or PPP. Good luck!
2 Reply
Julie Chai
Investor · La Palma, CA · Member since 2021 · 71 posts · 19 votes
4y
Quote from @Tony Spencer:

Can anyone do a DSCR in New York State? 15-20% down?

Hey Tony, I'm actually getting a DSCR loan right now and my lender is from NY. It's 15% down on SFH and 25% down on Multi Fam and currently it's at 6.8% rate. He's been really helpful and helped me cash out refinance my house too. Everything done in super quick timing.
3 Reply
Sean Bramble
Investor · United States · Member since 2020 · 202 posts · 284 votes
4y
I spoke to a company called Valor Lending just now. They offer 85% LTV DSCR loans on STRs, with one catch: they won't estimate revenue based on Airdna ... has to be STR actuals from the previous owner/ host. I'm searching for properties that likely will not have previous STR track record ... so less applicable to me ... but I know many of you are buying existing STRs so hopefully this helps one of you
1 Reply
Lauren Holmes
Investor · Littleton, CO · Member since 2022 · 13 posts · 10 votes
4y
Quote from @Melissa Claypool:

I am currently checking in with FP - Finance Properties, they say they can do 15%. Rates will be 6% to 7%. For 20% down it will be upper 5% to 6%. They also look for 6 months of reserves (can use 401k... so on). Will let you know how it goes

Hi Melissa, I googled Finance Properties and can not find them. Would you mind sharing contact information? THANK YOU!!
0 Reply
Lauren Holmes
Investor · Littleton, CO · Member since 2022 · 13 posts · 10 votes
4y
Quote from @Melissa Claypool:

Well now the Lender says (after I signed a Disclosure for 15% down) that they have suspended all 15% down loans so now I have to come up with more money down to be 20% down. They also charged over $700 for an appraisal saying due to demand the price is higher now. When they called me about the suspension of the 15% down (and now want me to sign a new loan disclosure) they said the appraisal has also increased to over $1010.00 because the appraisal company thinks the area is in the mountains. It is just outside of Asheville. - less than 20 min. Can they change the down payment agreement and has anyone else been seeing the appraisal at this amount? In January I was charged over $400 for an appraisal but had to back out of the purchase due to issues brought up by the inspection.

I see your update here and that is rough! Yes, we are in contract in Pigeon Forge and also had to pay $1,250 for appraisal!! Times are tough right now but I heard a good quote by someone that these conditions are 'separating the sheep from the wolves' so I am just going to keep keeping on!
1 Reply
Tony Spencer
Carnation WA · Member since 2021 · 27 posts · 12 votes
4y
IF.. A property has a rental history as an STR. Is it possible to use that income to qualify towards your DTI and in that case purchase it with a conventional 20% down investment loan, and not have to go the DSCR route? The big advantage I see in this would be a lower rate, and more importantly the ability to do a cash out refi before the 5 year penalty mark. Which is obviously huge if trying to scale your STR portfolio. Thoughts?
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Lauren Holmes
Investor · Littleton, CO · Member since 2022 · 13 posts · 10 votes
4y
Quote from @Tony Spencer:

IF.. A property has a rental history as an STR. Is it possible to use that income to qualify towards your DTI and in that case purchase it with a conventional 20% down investment loan, and not have to go the DSCR route? The big advantage I see in this would be a lower rate, and more importantly the ability to do a cash out refi before the 5 year penalty mark. Which is obviously huge if trying to scale your STR portfolio. Thoughts?

I don't think the underwriters on a conventional loan would allow the seller's 1099 as something you could count as your income but you can try.
1 Reply
Claire Vaccaro
Member since 2022 · 26 posts · 2 votes
4y
@Jay S. I would love to get this info as well!
0 Reply
Jay S.Pro Member
Lender · San Francisco Bay Area · Member since 2019 · 52 posts · 46 votes
4y
Quote from @Claire Vaccaro:

@Jay S. I would love to get this info as well!

Will send you details.
[email protected]408-832-8200
2 Reply
Basil Mulayamkuzhiyil
Member since 2020 · 2 posts · 0 votes
4y
Quote from @Jay S.:

Hi Anthony, will DM you and give details. We have few lenders which can make exception and provide 15% down on DSCR loan.

Hi Anthony, could you please give info of lenders that allow DSCR loan with 15% down?
0 Reply
Tony Spencer
Carnation WA · Member since 2021 · 27 posts · 12 votes
4y
From all the different loan brokers Ive spoken to. A 15% DSCR has come, gone, come, and is gone again. It seems this loan product has been particularly volatile over the past few months. Even 20% is only given (STR specific), under certain conditions.
0 Reply
Paul N Marklevitz
Rental Property Investor · Harrietta, MI · Member since 2023 · 3 posts · 0 votes
3y
Quote from @Jay S.:

Hi Anthony, will DM you and give details. We have few lenders which can make exception and provide 15% down on DSCR loan.

when you get a chance could you please Dm me the info on a 15% down payment dscr loan thank
s, Paul
0 Reply
Paul N Marklevitz
Rental Property Investor · Harrietta, MI · Member since 2023 · 3 posts · 0 votes
3y
Quote from @Julie Chai:

Quote from @Tony Spencer:

Can anyone do a DSCR in New York State? 15-20% down?

Hey Tony, I'm actually getting a DSCR loan right now and my lender is from NY. It's 15% down on SFH and 25% down on Multi Fam and currently it's at 6.8% rate. He's been really helpful and helped me cash out refinance my house too. Everything done in super quick timing.

Hello Julie, could you please pass yoiur lender info to me when you get a chance thanks,Paul
0 Reply
Jonathan Taylor
Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes
3y
@Julie Chai that sounds like a conventional lender as DP percentages are based on unit count. I could be wrong but share a bit more info so we can see if the loan product is solid
0 Reply
Julie Chai
Investor · La Palma, CA · Member since 2021 · 71 posts · 19 votes
3y
@Paul N Marklevitz I sent you a message for the details.
@Jonathan Taylor Hi Jonathan, fourplex is still considered residential so I only had to down 20% with the dscr loan. Anything above 4 units would be considered commercial loan... in that case, 25% down is needed. Lender said as long as the rent can cover the mortgage, it'll be approved. Hope that makes more sense.
0 Reply
Jonathan Taylor
Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes
3y
@Julie Chai Thanks for the clarification. I do those loans all day so I am very familiar with DSCR lending. I was more curious on the 15% down since none of my lenders leverage above 80 LTV on purchases.
0 Reply
Julie Chai
Investor · La Palma, CA · Member since 2021 · 71 posts · 19 votes
3y
@Jonathan Taylor Oh I see. What is the usual down payment amount for a SFH using DSCR loan? At that time, my lender told me it was 15% down.
0 Reply
Steven Miller
New to Real Estate · CA · Member since 2022 · 21 posts · 1 vote
3y
Quote from @Jay S.:

Hi Anthony, will DM you and give details. We have few lenders which can make exception and provide 15% down on DSCR loan.
Hey Jay,
I would be interested in learning about these lenders that allow less than 20% down on their DSCR products!
0 Reply
Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
2d
These came back now, however the DSCR and experience requirements are a bit stringent. Happy to take a look.
[email protected]818-269-7983
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