Hello everyone I’m currently looking at properties to rent in Phoenix/Scottsdale area. Looking to use a DSCR loan and I’m curious of what rates are currently available?

This is a good resource for you! https://myperfectmortgage.com/...

Hey David. DSCR rates are currently in the 7.5% - 9.5% range right now. Will obviously depend on the deal specifics; property type, loan amount, cashflow, credit, leverage, prepay penalty.

I think what you are missing is that DSCR Loans are still a very small option for multifamily. DSCR Loans limited to 10 units max, and the rates for anything over 1 unit will be a bit higher. Also, DSCR Loans only for stabilized/turnkey, so MF syndications are likely going to not be eligible (if over 10 units) or any value-add/bridge

Since this post has been bumped up, good news is that DSCR rates are now probably in the 6.5-8.5% range right now vs. the 7.5%-9.5% range from a couple months ago

Those rate ranges all sound fair. Something to consider for the average investor that is curious about DSCR, there are plenty of fine print items. Many lenders give better rates if the appraisers opinion of rents is 1.25%, 1.1% or 1% compared to the mortgage payment. This is hard to do in todays market. If you are below a 1% ratio of rents to payment, the rates get worse and worse. Also, the best rates for DSCR come with the longest Pre payment penalties. Some people do not care, but so do not want a 4-5 year PPP. Flexibility is an important consideration. If you hear 7.5% DSCR rates, that probably has 1%-2% in discount points (up front closing costs to buy the rate down), a 4-5 year PPP, and it probably assumes a perfect rents/payment ratio. Most scenarios do not end up looking like that. Find a lender that you really like and can honest and up front with, and have a good dialogue of your goals with the property besides hunting for the best rate, because that usually ends up poorly...

Hi David, Like the others have said, I'm seeing DSCR rates start in the low 7's and go up depending on the lender's specific loan level pricing adjusters. Every lender will have different pricing adjusters depending on the category, such as a lower or higher FICO score/LTV, so it's always a good idea to shop around.

Problem is to get into that condition, it has to pass the appraisal phase which is executed by the lender. By that time, it's almost we as investor already locked into particular lender.If it's FM loan, I could still switch because every lender still follow the FM guidelines.So with DSCR loan, in theory we can not into the best rate possible that might be available in the open market. The high 6 rate seems like a teaser rate.

Yes typically, but generally should be possible to do one with no prepay or very light (say 1% if you prepay in the first year). The tradeoff will be a somewhat higher rate and/or origination points

So if I want to refi when rates drop. I’m better off putting as little down as possible. Are there prepayment penalties for most DSCR loans?

Yes - this scenario could get you a 6.500% rate, probably would need a couple of points origination fee though. Would help if DSCR is >1.25x, a credit >760 and if willing to do a 5/5/5/5/5 prepay instead of 5/4/3/2/1

Range of DSCR rates?Range of DSCR rates?

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Range of DSCR rates?

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