DSCR vs Conventional Rates

[Doug Smith]

We're in an odd time where the DSCR programs that we're pricing out have better rates right now than Conventional (Fannie/Freddie) Investment pricing. Fannie and Freddie aren't really built for investors and they have "Loan Level Pricing Adjustments" that push their rates a bit higher than owner-occupied loans. We've usually seen a bigger spread between "Agency" (Fannie/Freddie/etc) and "Non-QM" (which includes the DSCR class of loans). That spread has compressed and, in many cases, Non-QM is cheaper than Agency products right now. If you're reading older posts and focusing only on Conventional financing for investment property, make sure you're pricing out Non-QM/DSCR as well. We're finding that as we price loans out for borrowers that the DSCR rates are often times beating Conventional right now. Don't just rely on "old news". Rates and programs are always changing. Just a "public service announcement". Carry on.