Clarity on DSCR Loans

[Vicky Manthos]

Fairly new to the real estate scene and am interested in purchasing a multi-family, preferably a quadplex, by the end of the year. 

I have been exploring DSCR loans as a mechanism of financing. The yielded BP forum posts and online searches have been helpful, though there are a few things I find ambiguous.. If you may kindly clarify for a newbie.

In particular, is previous property ownership required to pursue this option (It seems a ratio of ~1.2 is more important); Also, wondering if the property in question must be purchased through a LLC? Some lender websites comment on the aforementioned while others do not. Therefore, wondering if there is a specific set of criteria with respect to this or if this differs from lender to lender.

Thank you for your time (and patience). :D

[Eric Hobbs]

@Vicky Manthos

Regarding your question about previous property ownership: If you're a new investor you would be required to own a primary residence and be on time with payments for 1 full year. The requirements are a little more strict for new investors. There may be lenders that don't have this requirement, but I know from my experience being in the mortgage space all my lenders require a new investor (without prior Investing experience) to own a primary residence to obtain a DSCR loan. A DSCR loan is also called Investor Cash Flow Loan. This mortgage falls under the Non-Qm mortgage product, which essentially just means it's outside of Conventional financing. There are a gazillion lenders so you may be able to find a lender that doesn't have this requirement, but may be very difficult.