Realtor · Columbus, Franklin County · Member since 2026 · 144 posts · 54 votes
Freddie Mac's Primary Mortgage Market Survey put the 30-year fixed at 7.18% for the week of Nov 5, 2026, the third straight weekly drop (it was 7.24% the week before). That is still about a point above a year ago. Source: freddiemac.com/pmms
On value-add 1-4 unit buys I treat a rate dip as a lock opportunity, not a reason to loosen the deal. Here is the habit that keeps me out of thin DSCR:
1. Run the loan at today's quote AND at 7.5% (or whatever rate would still clear a refinance if the dip reverses).
2. Use leased rents or hard comps, not pro forma "after rehab" rent, for the DSCR test on the hold.
3. Add vacancy, taxes at the purchase price, insurance, and a real repair line before I celebrate cash flow.
4. Only then ask whether a rate lock or a float-down is worth the fee.
A stronger-than-expected jobs print can push rates back up after a dip. Underwriting the higher rate first means a lock is upside, not a requirement for the deal to work.
How are you stress-testing DSCR right now: a flat cushion above today's quote, or a hard floor rate you refuse to underwrite below?
I use a hard floor, not a flat cushion. I underwrite my Memphis deals at the higher rate first, so a dip is upside, not a requirement for the deal to work. My buy box is under $100K, ARV $180K to $265K, and I refinance with DSCR loans at 70 to 80% LTV. I also underwrite to the 1% rule, using real Section 8 rents of $1,395 to $1,950 for 3BR+, not pro forma rent. If the deal does not work at the higher rate, with vacancy, taxes, insurance, and repairs included, I pass. A 7.18% quote is nice, but I do not want a deal that only works if rates stay down. What rate would your deal still work at if it moved back up?
Running leased rents instead of after-rehab pro forma is the step most people skip, so you're already ahead of the usual thin DSCR mistake. I'd use a hard floor, and I'd set it from the exit, not from today's quote. The floor is the rate where the hold still clears the lender's minimum DSCR at the LTV you're counting on. On the programs I see, coverage near 1.0 often costs you in pricing, and some lenders cap the higher LTV tiers at stronger ratios. So a higher rate can show up as more cash left in the deal, which a flat cushion doesn't really capture. On a value-add buy the refi is usually months out anyway, so the floor is covering time as well as the next jobs print. Has your stressed rate ever knocked one of your deals into a lower LTV band?
Hard floor here too, and I'd add one more line to your list. Some DSCR programs will clear ratios well under 1.0, and some let you qualify on the interest-only payment, so "the lender approved it" and "it cleared my own test" can be very different numbers. Run your floor on the fully amortizing payment even if you take the IO option.