DSCR Loans and seasoning

Most Popular Reply

Robin SimonBusiness Member
Lender 路 Austin, TX 路 Member since 2022 路 5k+ posts 路 4k+ votes
3y
Quote from @Ryan Taylor:

When it comes to a DSCR loan...does the down payment percentage have to be seasoned funds?


 Will vary from lender to lender but generally not required.  Will likely have to source any significant funds that came into the account within a couple of months to satisfy AML and Straw Borrower concerns

[email protected]
Harpoon Capital514 Reviews
WebsiteView Page
4Reply
See this reply in the discussion

18 Replies

Jump to latestLatest
  • John O'LearyPro Member
    Lender 路 Winter Park, FL 路 Member since 2021 路 738 posts 路 412 votes
    3y

    No, but the lender may require a Letter of Explanation if there was a large deposit. Gifted funds are ok. 

    [email protected]800-663-4122
    2Reply
  • Robin SimonBusiness Member
    Lender 路 Austin, TX 路 Member since 2022 路 5k+ posts 路 4k+ votes
    3y
    Quote from @Ryan Taylor:

    When it comes to a DSCR loan...does the down payment percentage have to be seasoned funds?


     Will vary from lender to lender but generally not required.  Will likely have to source any significant funds that came into the account within a couple of months to satisfy AML and Straw Borrower concerns

    [email protected]
    Harpoon Capital514 Reviews
    WebsiteView Page
    4Reply
  • Brandon BeardtPro Member
    Lender 路 La Crescenta, CA 路 Member since 2021 路 261 posts 路 157 votes
    3y
    Quote from @Ryan Taylor:

    When it comes to a DSCR loan...does the down payment percentage have to be seasoned funds?

     Hi Ryan,

    DSCR lenders typically want to see asset statements going back at least 60 days. If the funds you plan on using for the down payment have been in there that long, no problem. If there are any large deposits indicated on those statements, you'll more than likely need an LOE to source it and verify it's from an approved source (lender's discretion if the deposit needs to be sourced and whether the source is allowed or not).

    [email protected]818-726-2418
    1Reply
  • Khemraj Sarju Jr.
    Lender 路 Member since 2022 路 115 posts 路 29 votes
    3y
    Quote from @Ryan Taylor:

    When it comes to a DSCR loan...does the down payment percentage have to be seasoned funds?


     We assist client nationwide with out having to season the funds and in refi situations, only 30 day seasoning for property ownership. 

    1Reply
  • Ryan Taylor
    OP
    Member since 2022 路 88 posts 路 38 votes
    3y
    Quote from @Robin Simon:
    Quote from @Ryan Taylor:

    When it comes to a DSCR loan...does the down payment percentage have to be seasoned funds?


     Will vary from lender to lender but generally not required.  Will likely have to source any significant funds that came into the account within a couple of months to satisfy AML and Straw 

     Thank you for that...kind of what I was thinking...but was not 100% on it...and forgive my ignorance...but a "Straw Borrower"...what is that exactly...

    0Reply
  • Givo Aghasi
    Lender 路 Los Angeles, CA 路 Member since 2022 路 238 posts 路 73 votes
    3y

    It depends on the lender @Ryan Taylor but typically a Letter of Explanation will work. This is a good reason why working with a mortgage broker can help. They have the Knowledge and expertise. Mortgage brokers have specialized knowledge of the mortgage market and can help investors navigate the process of securing financing. They can help investors understand their options and make informed decisions based on their individual needs and financial situation.



    2Reply
  • Ryan Taylor
    OP
    Member since 2022 路 88 posts 路 38 votes
    3y
    Quote from @Khemraj Sarju Jr.:
    Quote from @Ryan Taylor:

    When it comes to a DSCR loan...does the down payment percentage have to be seasoned funds?


     We assist client nationwide with out having to season the funds and in refi situations, only 30 day seasoning for property ownership. 

    Thank you for that...great information to know...
    so if I am reading this correctly...acquire property through DSCR financing say 65%LTV...refi 30 days at 80%LTV on a conventional cash out to recover some of the down...or all of the down depending on appraisal...
    0Reply
  • Khemraj Sarju Jr.
    Lender 路 Member since 2022 路 115 posts 路 29 votes
    3y
    Quote from @Ryan Taylor:
    Quote from @Khemraj Sarju Jr.:
    Quote from @Ryan Taylor:

    When it comes to a DSCR loan...does the down payment percentage have to be seasoned funds?


     We assist client nationwide with out having to season the funds and in refi situations, only 30 day seasoning for property ownership. 

    Thank you for that...great information to know...
    so if I am reading this correctly...acquire property through DSCR financing say 65%LTV...refi 30 days at 80%LTV on a conventional cash out to recover some of the down...or all of the down depending on appraisal...

     That is correct. With great credit you can even get in with little as 20-25% down and rates in the low 7s. 

    1Reply
  • Robin SimonBusiness Member
    Lender 路 Austin, TX 路 Member since 2022 路 5k+ posts 路 4k+ votes
    3y
    Quote from @Ryan Taylor:
    Quote from @Robin Simon:
    Quote from @Ryan Taylor:

    When it comes to a DSCR loan...does the down payment percentage have to be seasoned funds?


     Will vary from lender to lender but generally not required.  Will likely have to source any significant funds that came into the account within a couple of months to satisfy AML and Straw 

     Thank you for that...kind of what I was thinking...but was not 100% on it...and forgive my ignorance...but a "Straw Borrower"...what is that exactly...


     "Straw Borrower" would be using someone with a good credit score for example to be the borrower on the loan, such as a guy with 600 credit using his sisters 750 credit to qualify and faux-own the property while he is the real owner and operator of the property.  So in this case, a fraud would be for him to send the money to his sister to put the down payment on the loan and qualify, and then once the loan is done, she transfers back the property

    [email protected]
    Harpoon Capital514 Reviews
    WebsiteView Page
    0Reply
  • Ryan Taylor
    OP
    Member since 2022 路 88 posts 路 38 votes
    3y
    Quote from @John O'Leary:

    No, but the lender may require a Letter of Explanation if there was a large deposit. Gifted funds are ok. 


     Good information to know...thank you for that...so an LOE would suffice most large deposits or just Gifted funds...and do the gift funds need to come from a relative ...

    0Reply
  • Ryan Taylor
    OP
    Member since 2022 路 88 posts 路 38 votes
    3y
    Quote from @Robin Simon:
    Quote from @Ryan Taylor:
    Quote from @Robin Simon:
    Quote from @Ryan Taylor:

    When it comes to a DSCR loan...does the down payment percentage have to be seasoned funds?


     Will vary from lender to lender but generally not required.  Will likely have to source any significant funds that came into the account within a couple of months to satisfy AML and Straw 

     Thank you for that...kind of what I was thinking...but was not 100% on it...and forgive my ignorance...but a "Straw Borrower"...what is that exactly...


     "Straw Borrower" would be using someone with a good credit score for example to be the borrower on the loan, such as a guy with 600 credit using his sisters 750 credit to qualify and faux-own the property while he is the real owner and operator of the property.  So in this case, a fraud would be for him to send the money to his sister to put the down payment on the loan and qualify, and then once the loan is done, she transfers back the property


     Got it...learned something new today...never under estimate the creative mind...lol..thank you for that

    0Reply
  • Ryan Taylor
    OP
    Member since 2022 路 88 posts 路 38 votes
    3y
    Quote from @Khemraj Sarju Jr.:
    Quote from @Ryan Taylor:
    Quote from @Khemraj Sarju Jr.:
    Quote from @Ryan Taylor:

    When it comes to a DSCR loan...does the down payment percentage have to be seasoned funds?


     We assist client nationwide with out having to season the funds and in refi situations, only 30 day seasoning for property ownership. 

    Thank you for that...great information to know...
    so if I am reading this correctly...acquire property through DSCR financing say 65%LTV...refi 30 days at 80%LTV on a conventional cash out to recover some of the down...or all of the down depending on appraisal...

     That is correct. With great credit you can even get in with little as 20-25% down and rates in the low 7s. 


     Awesome!!

    Great to know 馃

    0Reply
  • John O'LearyPro Member
    Lender 路 Winter Park, FL 路 Member since 2021 路 738 posts 路 412 votes
    3y

    @Ryan Taylor funds don't have to be from a family member. You also might want to check the seasoning time for the conventional refi portion. I believe you need 12 months of seasoning now before you cash out. 

    [email protected]800-663-4122
    0Reply
  • Bernard Joseph S.
    Investor 路 NJ 路 Member since 2022 路 155 posts 路 224 votes
    3y
    Quote from @John O'Leary:

    @Ryan Taylor funds don't have to be from a family member. You also might want to check the seasoning time for the conventional refi portion. I believe you need 12 months of seasoning now before you cash out. 

    12 months for Fannie Mae as of Feb 1st on cash out refi  but not private lenders

    0Reply
  • John O'LearyPro Member
    Lender 路 Winter Park, FL 路 Member since 2021 路 738 posts 路 412 votes
    3y

    @Bernard Joseph S. Correct, ours is only 6 months but he mentioned refinance at 80% with a conventional lender. @Ryan Taylor it's also worth noting the DSCR loan will have a pre payment penalty so a bridge loan might serve you better.

    [email protected]800-663-4122
    0Reply
  • Bernard Joseph S.
    Investor 路 NJ 路 Member since 2022 路 155 posts 路 224 votes
    3y
    Quote from @John O'Leary:

    @Bernard Joseph S. Correct, ours is only 6 months but he mentioned refinance at 80% with a conventional lender. @Ryan Taylor it's also worth noting the DSCR loan will have a pre payment penalty so a bridge loan might serve you better.


     yes sir!

    1Reply
  • Jay ThomasPro Member
    Real Estate Agent 路 Houston, TX 路 Member since 2021 路 1k+ posts 路 715 votes
    3y

    When applying for a Real Estate loan, lenders may or may not require background information. However, borrowers might need to provide proof of funds from any significant deposits that were made into their account within the last couple of months in order to satisfy Anti-Money Laundering (AML) and Straw Borrower regulations. Ultimately, this requirement will vary based on the lender's specific policies. By ensuring you are aware of these requirements ahead of time, you can make sure your Real Estate loan application process goes smoothly.

    [email protected]832-889-5607
    1Reply
  • Christian BachelderBusiness Member
    Real Estate Broker 路 Marina del Rey, CA 路 Member since 2018 路 105 posts 路 25 votes
    3y

    Many lenders do have a 60 day seasoning requirement, but some DSCR lenders are more flexible with sourcing transfers, gifts, etc in ways that allow you to get around the guidelines sometime. We go through our consult questionnaire every time someone submits a loan app with us that hopefully uncovers things like this before they are a problem in underwriting.

    I'd reach out to a mortgage broker who works with many different DSCR lenders to determine the best fit for your situation!

    Podcast Guest on Show 5 Steps to Get ANY Home Offer Accepted (WITHOUT Being the Highest Bidder)
    The OneBrokerage4.9380 Reviews
    WebsiteView Page
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free