Is it possible to get a HELOAN on an investment?

Question

Hello,

I had a W-2 up until March, but recently transitioned to full time real estate investing.

Is it possible to get a home equity loan based on DSCR? (or otherwise?) Las Vegas NV 89142

investment, rented out by section 8 tenant for $1550 per month. I have about 100k in equity in this home.

Erik Estrada · Answer

Hello Harrison,

There is currently no DSCR product that allows for second position.

You will be better off doing a a cash out refinance with a DSCR loan. Be aware that many lenders will require a market rent appraisal which can reduce your LTV. There are a handful that don't. Max LTV for cash outs are 75% of the appraised value, as long as it is seasoned for 3 months.

Dennis Muno · Answer

Hello Harrison,

Well a HELOAN and a DSCR are different with different conditions for approval and financing.

For a HELOAN, you likely will have to show some proof of personal income. Since you transferred to self employed?? How has your income been? On the upward or downward? On the upward, the may be options for you. How much is the home worth? Current loan/lien payoff? How much equity are you looking to pull out?

For DSCR cashout refi? What is the PITI(prinicipal&interest, tax and insurance) on the home? For this loan your income qualify document will the DSCR ratio(monthly rent/monthly PITI; ratio of 1.2 and greater good; below 1 possible with some lenders but with higher pricing) and credit(660+ for best pricing). All loans and their pricing are usually based on risk to lender.

I don't know what your income trend has been but a DSCR cashout refi seems like something to look into. Your FICO, DSCR ratio will determine pricing you get.

Whether DSCR cashout refi/ home equity loan, I would recommend you get pricing before you proceed

Doug Smith · Answer

With the fact that you left your W-2 Job recently, you'll pretty much have to go no-income. For an investor, that's pretty much DSCR and that would need to be in a first position. You can do a cash-out refi on it, but depending upon the rate on the first, it might not be that great of an idea. Just a few minutes ago, I locked a DSCR at 7.875% with 1.9% points, but that was on a purchase at 75% LTV with a 739 credit score. Cash out is going to have a bump. I felt that was a pretty great rate for where the 10-Year Treasury is sitting right now. What is the rate on the first?

Is it possible to get a HELOAN on an investment?

3 Replies