DSCR lender for North Carolina property
Rental Property Investor · Charlotte, NC · Member since 2019 · 57 posts · 53 votes
DSCR lender for North Carolina property
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Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votesQuote from @Lore Postman:
I'm searching for a DSCR or similar lender for a North Carolina BRRRR. Will be ready by end of this year. If you're a lender or have recent experience with one, would you mind providing the following information to help me narrow my search (plus other thread followers may find your answers insightful).
- What do you require for your DSCR loans? (i.e. documentation, landlord experience, credit scores above x, net worth above $xxx)
- Do your loans have pre-payment penalties?
- What do your closing costs include? (i.e. points, appraisal, etc.)
Thanks in advance for sharing your contact info and these few details.
Hi Lore - I can share our guidelines which are in line with the industry and comments above, but a little different. We are also a BRRRR specialist in that we have complementary programs DSCR and a bridge/hard money team, so we do a lot of "double deals" where we in a BRRRR we finance the purchase through hard money loan and then refi once the property is rehabbed and rented, all in one house (makes it much easier - don't have to go through the whole financing process again so quickly!)
What do you require for your DSCR loans? (i.e. documentation, landlord experience, credit scores above x, net worth above $xxx)
Light Documentation based on the property, no experience required, minimum credit 620, no minimum net worth
Do your loans have pre-payment penalties?
Our standard prepayment penalty is 5% for 5 years, but this is flexible (can have shorter/lesser penalties or none at all, but will pay higher rate or closing fees)
Closing Costs
Typically a 1% closing fee (only incurred if loan closes, can pay more in fees if you want to buy down the rate, less prepayment penalties, etc.). Pass-through costs such as appraisal, credit report, docs, entity reviews, title etc. usually ~$3k or so
Harpoon Capital514 Reviews
15 Replies
- Lender · Member since 2021 · 100 posts · 164 votes4y
- What do you require for your DSCR loans? (i.e. documentation, landlord experience, credit scores above x, net worth above $xxx)
No DTI Consideration, No Income Verification, No Employment Verification ... need good credit (700+ should earn you the best terms available). No specific net worth requirement, just need to show liquidity such as 6mo of PITIA reserves in the form of bank statements. For a purchase, you also have to show DP + Est Closing Costs.
- Do your loans have pre-payment penalties?
Yes, most DSCR loans will have some kind of PPP. Usually 5 years (step-down or lock-out). Can be 3. We offer 2 but for a hit onto the rate.
- What do your closing costs include? (i.e. points, appraisal, etc.)
You'll usually have to pay for appraisal up front. Some form of credit and background also.
Closing costs from the lender would be some range of origination (1 to 3 points) and then legal / underwriting / admin fees. Other customary items you'll see on your settlement state would be: title, insurance, escrows.
- Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes4y
Big variety of DSCR products available today. No way anyone can tell you what rates or programs will exist in December. Many DSCR lenders disappeared.
Rental income is what the appraiser determines is long term rents, you have a lease and deposit at closing.
FICO middle score will determine part of your interest rate. FICO as low as 640 allowed. Do you have a prior mortgage (it cannot have forbearance) ? No net worth requirement.
Not all programs have prepay, or you can buy out of them, little difference in 30 year or 7 year rates.
What is needed: identification, decent credit, mortgage bills prior month and any HOA, bank statements past two months.
You pay for appraisal upfront. You pay title escrow transfer taxes and $996 processing, usually there are impounds required.
Property has to meet health and safety codes. Comparables are what is used for valuation not costs. Property has to cash flow after PITI+HOA to stand on it's own legs.
- 4yRobin SimonBusiness MemberLender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
Quote from @Lore Postman:
I'm searching for a DSCR or similar lender for a North Carolina BRRRR. Will be ready by end of this year. If you're a lender or have recent experience with one, would you mind providing the following information to help me narrow my search (plus other thread followers may find your answers insightful).
- What do you require for your DSCR loans? (i.e. documentation, landlord experience, credit scores above x, net worth above $xxx)
- Do your loans have pre-payment penalties?
- What do your closing costs include? (i.e. points, appraisal, etc.)
Thanks in advance for sharing your contact info and these few details.
Hi Lore - I can share our guidelines which are in line with the industry and comments above, but a little different. We are also a BRRRR specialist in that we have complementary programs DSCR and a bridge/hard money team, so we do a lot of "double deals" where we in a BRRRR we finance the purchase through hard money loan and then refi once the property is rehabbed and rented, all in one house (makes it much easier - don't have to go through the whole financing process again so quickly!)
What do you require for your DSCR loans? (i.e. documentation, landlord experience, credit scores above x, net worth above $xxx)
Light Documentation based on the property, no experience required, minimum credit 620, no minimum net worth
Do your loans have pre-payment penalties?
Our standard prepayment penalty is 5% for 5 years, but this is flexible (can have shorter/lesser penalties or none at all, but will pay higher rate or closing fees)
Closing CostsTypically a 1% closing fee (only incurred if loan closes, can pay more in fees if you want to buy down the rate, less prepayment penalties, etc.). Pass-through costs such as appraisal, credit report, docs, entity reviews, title etc. usually ~$3k or so
Harpoon Capital514 Reviews - Lender · Austin Texas · Member since 2022 · 319 posts · 156 votes4y
The above answers pretty much encompass what you need to know about a DSCR. It really comes down to appraisal (1004/1007), FICO (700+ for best rates), liquidity (6-9 months PITI), and Ratio (1.15 or better to get most leverage with best rate).
Most will have PPP, 5yrs. 3 yrs is usually available but will take a rate hit.
Different products available - 5/1 ARMs, 7/1 ARMs, 30 Yr Fixed ETC.
- Rental Property Investor · Charlotte, NC · Member since 2019 · 57 posts · 53 votes4y
Quote from @Riaz Gillani:
- What do you require for your DSCR loans? (i.e. documentation, landlord experience, credit scores above x, net worth above $xxx)
No DTI Consideration, No Income Verification, No Employment Verification ... need good credit (700+ should earn you the best terms available). No specific net worth requirement, just need to show liquidity such as 6mo of PITIA reserves in the form of bank statements. For a purchase, you also have to show DP + Est Closing Costs.
- Do your loans have pre-payment penalties?
Yes, most DSCR loans will have some kind of PPP. Usually 5 years (step-down or lock-out). Can be 3. We offer 2 but for a hit onto the rate.
- What do your closing costs include? (i.e. points, appraisal, etc.)
You'll usually have to pay for appraisal up front. Some form of credit and background also.
Closing costs from the lender would be some range of origination (1 to 3 points) and then legal / underwriting / admin fees. Other customary items you'll see on your settlement state would be: title, insurance, escrows.
Thanks for the info! I'm finding that most do have ppp... but might find that rare gem through this thread. Lol
- Rental Property Investor · Charlotte, NC · Member since 2019 · 57 posts · 53 votes4yThanks Robin! I appreciate the response.
Quote from @Robin Simon:
Quote from @Lore Postman:
I'm searching for a DSCR or similar lender for a North Carolina BRRRR. Will be ready by end of this year. If you're a lender or have recent experience with one, would you mind providing the following information to help me narrow my search (plus other thread followers may find your answers insightful).
- What do you require for your DSCR loans? (i.e. documentation, landlord experience, credit scores above x, net worth above $xxx)
- Do your loans have pre-payment penalties?
- What do your closing costs include? (i.e. points, appraisal, etc.)
Thanks in advance for sharing your contact info and these few details.
Hi Lore - I can share our guidelines which are in line with the industry and comments above, but a little different. We are also a BRRRR specialist in that we have complementary programs DSCR and a bridge/hard money team, so we do a lot of "double deals" where we in a BRRRR we finance the purchase through hard money loan and then refi once the property is rehabbed and rented, all in one house (makes it much easier - don't have to go through the whole financing process again so quickly!)
What do you require for your DSCR loans? (i.e. documentation, landlord experience, credit scores above x, net worth above $xxx)
Light Documentation based on the property, no experience required, minimum credit 620, no minimum net worth
Do your loans have pre-payment penalties?
Our standard prepayment penalty is 5% for 5 years, but this is flexible (can have shorter/lesser penalties or none at all, but will pay higher rate or closing fees)
Closing CostsTypically a 1% closing fee (only incurred if loan closes, can pay more in fees if you want to buy down the rate, less prepayment penalties, etc.). Pass-through costs such as appraisal, credit report, docs, entity reviews, title etc. usually ~$3k or so
- 4yErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Lore Postman:
I'm searching for a DSCR or similar lender for a North Carolina BRRRR. Will be ready by end of this year. If you're a lender or have recent experience with one, would you mind providing the following information to help me narrow my search (plus other thread followers may find your answers insightful).
- What do you require for your DSCR loans? (i.e. documentation, landlord experience, credit scores above x, net worth above $xxx)
- Do your loans have pre-payment penalties?
- What do your closing costs include? (i.e. points, appraisal, etc.)
Thanks in advance for sharing your contact info and these few details.
Most DSCR lenders require that you own at least your primary residence to make sure you are not a first time home buyer, decent credit score, and the monthly rental income being greater than the debt service. Typically they have a 3 year prepayment penalty, with the option of paying 1% of the loan amount for 1 year pre pay. Closing costs typically include appraisal, credit report, underwriting fee, sometimes a processing fee, origination fee, title, and escrow.
Generally Most DSCR lenders do up to 75% LTV nowadays. Rates can vary, but typically low 7s to mid 8%. There is a 5/1 ARM floating at mid to high 6%.
LuxePrivate Investments LLC 572 Reviews - 4yRobin SimonBusiness MemberLender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
Quote from @Erik Estrada:
Quote from @Lore Postman:
I'm searching for a DSCR or similar lender for a North Carolina BRRRR. Will be ready by end of this year. If you're a lender or have recent experience with one, would you mind providing the following information to help me narrow my search (plus other thread followers may find your answers insightful).
- What do you require for your DSCR loans? (i.e. documentation, landlord experience, credit scores above x, net worth above $xxx)
- Do your loans have pre-payment penalties?
- What do your closing costs include? (i.e. points, appraisal, etc.)
Thanks in advance for sharing your contact info and these few details.
Most DSCR lenders require that you own at least your primary residence to make sure you are not a first time home buyer, decent credit score, and the monthly rental income being greater than the debt service. Typically they have a 3 year prepayment penalty, with the option of paying 1% of the loan amount for 1 year pre pay. Closing costs typically include appraisal, credit report, underwriting fee, sometimes a processing fee, origination fee, title, and escrow.
Generally Most DSCR lenders do up to 75% LTV nowadays. Rates can vary, but typically low 7s to mid 8%. There is a 5/1 ARM floating at mid to high 6%.
@Erik Estrada looking forward to connecting, we are getting ready to roll out 85% LTV on our DSCR program shortly
Harpoon Capital514 Reviews - 3yJesse GlatzPro MemberReal Estate Broker · Lake Jackson, Texas 77566 · Member since 2020 · 18 posts · 16 votes
These are some very good replies here and great information! I am a very seasoned SFR rental property owner here in Texas on the gulf coast, I have no short term rental experience but I am looking into a STR property in NC, specifically on the coast. I currently own 4 SFR rental properties, all have been cash flowing for 5-10 years since I have had them. I may be a bit overzealous here, but let's say I wanted to invest in a 2m-4m beachfront property, would the rental income and positive cash flow on that property be enough to qualify for a DSCR loan since it can "stand on its own legs" so to speak? Credit score is 770+, my only debt is the home mortgages on 3 of the 4 properties and all have 40% or more equity in them, and income surpases 200k per year from agent work and rentals. Would a DSCR lender be able to tell me easily, am I shooting too far for the moon with a property of this value or no?
- 3yChristian BachelderBusiness MemberReal Estate Broker · Marina del Rey, CA · Member since 2018 · 105 posts · 25 votes
@Jesse Glatz
Hey Jesse,
If this situation, it would most likely not cash flow on paper, but there are a number of dscr lenders, ourselves included, who can still fund the loan with a negative cash flow. Typically with higher value properties, best way to structure the financing is get a short term bridge or hard money loan, or a negative dscr loan with no PPP, and operate it for one year to get a good rental history. Once you prove it can cash flow, we can refinance you out into a long term dscr loan with the proven cash flow.
Hope that helps! Good luck!
The OneBrokerage4.9379 Reviews - 3yStephanie P.Pro MemberWashington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
Quote from @Jesse Glatz:
These are some very good replies here and great information! I am a very seasoned SFR rental property owner here in Texas on the gulf coast, I have no short term rental experience but I am looking into a STR property in NC, specifically on the coast. I currently own 4 SFR rental properties, all have been cash flowing for 5-10 years since I have had them. I may be a bit overzealous here, but let's say I wanted to invest in a 2m-4m beachfront property, would the rental income and positive cash flow on that property be enough to qualify for a DSCR loan since it can "stand on its own legs" so to speak? Credit score is 770+, my only debt is the home mortgages on 3 of the 4 properties and all have 40% or more equity in them, and income surpases 200k per year from agent work and rentals. Would a DSCR lender be able to tell me easily, am I shooting too far for the moon with a property of this value or no?
Here are the numbers.
Right now, the LTV on a 4,000,000 purchase would cap out at 70% giving you a loan amount of 2,800,000 and the rate would be 7.875 (today) with a couple points. That's 1.2M out of pocket for down payment and then 60K or so in closing costs. Your monthly payment would be 20,301 without escrows. Those are today's numbers. I'd originate that if you've got the cash and credit. Not sure if I'd personally like that kind of debt, but I'd originate it all day long as long as Air DNA numbers supported it. Not sure if that answers your "shooting too far for the moon" question, but...
All the best
Stephanie
- 3yJesse GlatzPro MemberReal Estate Broker · Lake Jackson, Texas 77566 · Member since 2020 · 18 posts · 16 votes
Stephanie,
That is great information. I truly appreciate it. That would be more than I want to take on at the moment. I just so happened to see another property come up for sale in the same neighborhood for 1.7M, what would be the "quick and dirty" on that one for financials? That seems like it would be much better for me and has been in the rental pool for quite some time so good rental history there, the 4M one was a primary so I wasn't too sold on that one. I really want to move quickly on something before the season really starts to pop off there.
- 3yJesse GlatzPro MemberReal Estate Broker · Lake Jackson, Texas 77566 · Member since 2020 · 18 posts · 16 votes
Quote from @Christian Bachelder:
@Jesse Glatz
Hey Jesse,
If this situation, it would most likely not cash flow on paper, but there are a number of dscr lenders, ourselves included, who can still fund the loan with a negative cash flow. Typically with higher value properties, best way to structure the financing is get a short term bridge or hard money loan, or a negative dscr loan with no PPP, and operate it for one year to get a good rental history. Once you prove it can cash flow, we can refinance you out into a long term dscr loan with the proven cash flow.
Hope that helps! Good luck!
This is great information. I would like to know more about what you mean when you say it won't cash flow on paper and how it would be funded with a negative cash flow. What are the current rates for a bridge or hard money loan? I am still being really cautious about buying a STR since all my experience so far is SFR with long term tenants so I really don't want to jump too far in the deep end and sink. I don't mind a bit of discomfort and risk but perhaps we can toss around some numbers of what I can bring to the table and what kind of risk I am willing to take on a monthly payment basis until the rental process and income is that which trends upwards until its paying for itself and profitable and figure out a property price range from there.
- 3yChristian BachelderBusiness MemberReal Estate Broker · Marina del Rey, CA · Member since 2018 · 105 posts · 25 votes
Bridge/Hard money is anywhere from 9-15% right now and DSCR loans are 7-9% roundabout. I would highly recommend a consultation with a lender who can service the products you are looking for. I may know a good one to recommend ;D
The OneBrokerage4.9379 Reviews - Investor · Yamhill County, OR · Member since 2018 · 11 posts · 8 votes3y
All this information was very helpful, thank you.
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