Can first time investor/buyer get DSCR loan

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Can first time investor/buyer get DSCR loan

Nick Bandiera
Member since 2022 · 19 posts · 16 votes

Hello,

I am looking at purchasing my first rental property in the Cleveland area. I currently live in San Diego and can’t go conventional route until I get a W2.

Can I get a DSCR loan if I have never owned a home in the past? I am speaking to a lender who is adamant that this can't be done but I also see some lenders will allow it. Before I go down this rabbit hole, I was hoping someone could offer some advice.

Thanks 

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Stacy RaskinBusiness Member
Lender · Member since 2022 · 1k+ posts · 503 votes
3y

I know lenders that will do 20% down for a first time investor for a DSCR loan. Some require home ownership, others don't.

[email protected]818-770-0340
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  • Brett Deas
    CO · Member since 2022 · 588 posts · 426 votes
    3y

    Yes it can be done. I have done it. You just have to find the lender who can work with you to get it done. 

    0Reply
  • Dennis Muno
    Lender · Denton, TX · Member since 2023 · 349 posts · 80 votes
    3y

    Yes, it can be done. 

    DSCR loans are based on the amount of rent vs your expenses for the property. DSCR loans are qualified based on the the DSCR ratio= rent/total PITI(principal,interest,taxes, insurance).

    So, if your monthly rent is $1200 and your monthly PITI is 1000, your DSCR ratio would be 1.2($1200 rent/$1000 PITI expenses). Lenders usually like to see a 1 and above DSCR ratio. The better your ratio, the better your interest rate and terms.

    So do you have an idea of what the rent you will charge will be? Does the property already have a tenant in it? Even better for you. Lenders would like to see a rent schedule and past rents paid. 

    I hope this is helpful

    2Reply
  • Kristen L GarnerBusiness Member
    Lender · Phoenix, AZ · Member since 2021 · 451 posts · 287 votes
    3y

    Hi Nick! You can get DSCR loan funding as a first-time investor. You will likely incur a 5% LTV hit or slightly higher rate pricing. You can always try to request an exception if you have compensating factors such as high reserves, no mortgage lates, etc.

    [email protected]213-880-0434
    2Reply
  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 665 votes
    3y

    Hi Nick,

    First of congrats on gearing up to purchase your first investment. And YES! You absolutely can get a 80ltv dscr loan as a first time investor - would be happy to connect to help further!

    [email protected]860-538-3672
    ProAlpha Capital56 Reviews
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    1Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    3y
    Quote from @Nick Bandiera:

    Hello,

    I am looking at purchasing my first rental property in the Cleveland area. I currently live in San Diego and can’t go conventional route until I get a W2.

    Can I get a DSCR loan if I have never owned a home in the past? I am speaking to a lender who is adamant that this can't be done but I also see some lenders will allow it. Before I go down this rabbit hole, I was hoping someone could offer some advice.

    Thanks 


     Hey Nick, 

    You can do 25% down on a DSCR loan as a first timer. Not sure of anyone offering 80% LTV for first time investors......

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
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    0Reply
  • David Bilandzija
    Lender · Venice, CA · Member since 2021 · 189 posts · 132 votes
    3y

    @Nick Bandiera Your options are limited. First time home buyers generally do not qualify for DSCR loans. While not an absolute rule, for the most part DSCR lenders avoid working with first time home buyers because of perceived occupancy issues, not too mention you have no mortgage trade lines or experience. Lenders don't want their borrower's moving into the subject property for a number of legal and financial reasons. There are ways around this though. You could acquire the property with a hard money lender, stabilize it and then refinance into a DSCR loan after reaching the seasoning requirement for using appraised value. Lowest I'm aware of is 90 days. You could also partner up with someone that is experienced or owns their home to avoid the barriers to entry. Taking on an experienced partner will qualify you for a higher LTV. Good luck.

    1Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    It depends on the lenders guidelines. There are many different DSCR lenders, get a loan officer or mortgage broker to shop the loan for you.

    2Reply
  • Jay S.Pro Member
    Lender · San Francisco Bay Area · Member since 2019 · 51 posts · 46 votes
    3y

    Yes, you can do it. I've helped few clients in the past. Ask about DSCR no ratio products. Depending on the Lender, they can take less than 2 years experience. Let me know if you want to know it's guidelines.

    [email protected]408-832-8200
    1Reply
  • Nick BelskyBusiness Member
    Residential and Commercial Broker · Member since 2021 · 1k+ posts · 704 votes
    3y

    @Nick Bandiera

    Absolutely, yes. 

    Find a mortgage broker who can help match you with a lender who can meet your criteria.

    Cheers!

    [email protected]
    Belsky Mortgage, LLC527 Reviews
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    2Reply
  • Stacy RaskinBusiness Member
    Lender · Member since 2022 · 1k+ posts · 503 votes
    3y

    I know lenders that will do 20% down for a first time investor for a DSCR loan. Some require home ownership, others don't.

    [email protected]818-770-0340
    Bright Skyline518 Reviews
    WebsiteView Page
    2Reply
  • Account Closed
    Salt Lake City, UT · Member since 2017 · 14 posts · 4 votes
    3y
    Quote from @Jay S.:

    Yes, you can do it. I've helped few clients in the past. Ask about DSCR no ratio products. Depending on the Lender, they can take less than 2 years experience. Let me know if you want to know it's guidelines.

    Any suggestions for specific DSCR lenders for someone with multiple STRs and a 5+ year track record?   All of my current STRs have been financed conventionally.   I have a 30% cash on cash deal that is a pocket listing (I know 30% sounds high but I know the market as I own / operate 2 units in that location currently).  
    3Reply
  • Robin SimonBusiness Member
    Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
    3y
    Quote from @Account Closed:
    Quote from @Jay S.:

    Yes, you can do it. I've helped few clients in the past. Ask about DSCR no ratio products. Depending on the Lender, they can take less than 2 years experience. Let me know if you want to know it's guidelines.

    Any suggestions for specific DSCR lenders for someone with multiple STRs and a 5+ year track record?   All of my current STRs have been financed conventionally.   I have a 30% cash on cash deal that is a pocket listing (I know 30% sounds high but I know the market as I own / operate 2 units in that location currently).  

    Yes - this is the direction that some DSCR lenders are headed in terms of short term rentals, focus on the experienced professional STR operators that max out or "graduate" from conventional financing by hitting limits on size, property total or DTI qual and need more flexible underwriting.

    Check out BP featured STR mortgage lenders here:

    https://www.biggerpockets.com/...

    [email protected]
    Harpoon Capital514 Reviews
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    1Reply
  • Account Closed
    Salt Lake City, UT · Member since 2017 · 14 posts · 4 votes
    3y
    Quote from @Robin Simon:
    Quote from @Account Closed:
    Quote from @Jay S.:

    Yes, you can do it. I've helped few clients in the past. Ask about DSCR no ratio products. Depending on the Lender, they can take less than 2 years experience. Let me know if you want to know it's guidelines.

    Any suggestions for specific DSCR lenders for someone with multiple STRs and a 5+ year track record?   All of my current STRs have been financed conventionally.   I have a 30% cash on cash deal that is a pocket listing (I know 30% sounds high but I know the market as I own / operate 2 units in that location currently).  

    Yes - this is the direction that some DSCR lenders are headed in terms of short term rentals, focus on the experienced professional STR operators that max out or "graduate" from conventional financing by hitting limits on size, property total or DTI qual and need more flexible underwriting.

    Check out BP featured STR mortgage lenders here:

    https://www.biggerpockets.com/...

    Thank you!!!
    1Reply
  • Giancarlo Valverde Barriga
    New to Real Estate · Los Angeles · Member since 2023 · 13 posts · 8 votes
    3y

    SD is my hometown, and Cleveland is where I am looking at too! Feel free to reach out, I can connect you with some of the lenders who have been helping me navigate the DSCR route

    0Reply
  • Kayleen Hammerschmidt
    CA · Member since 2012 · 14 posts · 3 votes
    3y

    Hi @Nick Bandiera!

    As a first-time buyer without a previous home ownership history, it can be more challenging to qualify for certain types of loans, including DSCR loans. Many lenders prefer borrowers with prior home ownership experience because it demonstrates a track record of managing a property, including handling mortgage payments, property taxes, insurance, and property maintenance.

    However, this doesn't mean it's impossible to get a DSCR loan as a first-time buyer. Some lenders may be more flexible than others and may consider other factors, such as your credit score, income, and other financial strengths.

    Seek lenders that specialize in investment properties. Some lenders have specific programs designed for first-time buyers looking to invest in rental properties. Research and reach out to lenders who have experience in working with investors.

    Good luck!

    0Reply
  • Brittany MinocchiBusiness Member
    Lender · Massillon, OH · Member since 2022 · 1k+ posts · 486 votes
    3y

    To get right to the point - as you've found and others have mentioned, this is lender-dependent. Some lenders will allow first time home buyers, others will not and require that a borrower owns a primary home, and some require that you own a home AND have other investment experience. Once you find a lender, plan on 20%+ down. 

    [email protected]330-354-6590
    Brittany Minocchi - Barrett Financial Group, LLC522 Reviews
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    0Reply
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