Closing costs on DSCR Loan, High?

Investor · Beaver Falls, PA · Member since 2015 · 275 posts · 82 votes

We are about to close on a 4 unit. We are using a DSCR loan. 30 year Fixed. PP penalty of 5 years. My Credit score is 833. Purchase price $450,000, 20% down ($90,000). I've attached a cost sheet. So you think the numbers are fair?

https://share.icloud.com/photos/0b0A-ezVp7vKOn108RhcFRUhg

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Ed O.

Investor · Statewide, MO · Member since 2011 · 814 posts · 425 votes

10mo

If you're wanting to get a lot of feedback, put the numbers in this thread so users don't have to click a link and hope it's nothing bad.

Why not use a local bank?

Being in an environment where most of us expect rates to fall, a 5 year prepay is not a good move.

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Jaycee GreenePro Member
Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 727 votes
10mo
Quote from @John Matthew Johnston:

We are about to close on a 4 unit. We are using a DSCR loan. 30 year Fixed. PP penalty of 5 years. My Credit score is 833. Purchase price $450,000, 20% down ($90,000). I've attached a cost sheet. So you think the numbers are fair?
https://share.icloud.com/photos/0b0A-ezVp7vKOn108RhcFRUhg

@John Matthew Johnston How many other properties have you owned before? The closing costs of less than 4% of the loan amount is actually look pretty low for an HML. I assume you're getting their best rate as the FICO range they're using is 780-790. As long as this isn't your first investment, I think you could get a lower rate somewhere else, but this doesn't look too bad.
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John Matthew Johnston
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Investor · Beaver Falls, PA · Member since 2015 · 275 posts · 82 votes
10mo
@Jaycee Greene Thanks for the insight, we own 12 other properties as of now.
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Ed O.
Investor · Statewide, MO · Member since 2011 · 814 posts · 425 votes
10mo
If you're wanting to get a lot of feedback, put the numbers in this thread so users don't have to click a link and hope it's nothing bad.
Why not use a local bank?
Being in an environment where most of us expect rates to fall, a 5 year prepay is not a good move.
1 Reply
Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
10mo
points seem high -Could probably get down to 1.5 or 1.25 depending on who you are using, but its not out of this world crazy.
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Mike GrudzienPro Member
Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
10mo
Agree: you could do better on several metrics, but not too much. I second: why not a local bank or credit union?
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Raymond J. RodriguesBusiness Member
Lender · Miami, FL · Member since 2017 · 1k+ posts · 797 votes
10mo
@John Matthew Johnston I can likely refer you to someone that can get you a better deal. Feel free to contact me. Info is listed in my signature.
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John Matthew Johnston
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Investor · Beaver Falls, PA · Member since 2015 · 275 posts · 82 votes
10mo
@Mike Grudzien for a DSCR loan? This is our first time using a DSCR and I'm not aware of any local banks that do them.
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- Jaycee GreenePro Member
  Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 727 votes
  10mo
  Quote from @John Matthew Johnston:
  
  @Mike Grudzien for a DSCR loan? This is our first time using a DSCR and I'm not aware of any local banks that do them.
  
  @John Matthew Johnston Local banks do "DSCR" loans all the time, they just don't market them with that name. For a bank, this would most likely be called an "amortizing term loan on a non-owner occupied property".
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John Matthew Johnston
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Investor · Beaver Falls, PA · Member since 2015 · 275 posts · 82 votes
10mo
K@Ed O. I couldn’t figure how to up load a pic. The Rate is also 6.25. We are cash flowing around 1400/month as is and the rents are well below market. The place is probably worth around 650,000 so there is a big equity play also. I agree with the 5 year PP but we just wanted to lock it down ASAP
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John Matthew Johnston
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Investor · Beaver Falls, PA · Member since 2015 · 275 posts · 82 votes
10mo
@Chris Seveney
That for a 6.5 rate. I agree the points seem high
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- Erik EstradaBusiness Member
  Lender · Member since 2022 · 6k+ posts · 1k+ votes
  10mo
  Quote from @John Matthew Johnston:
  
  @Chris Seveney
  That for a 6.5 rate. I agree the points seem high
  
  This is not high at all, especially for a 4-plex. Realistically you'd be looking at 6.5-6.8% with points on a DSCR loan as of now. Maybe you can increase the rate to decrease the points, if you feel they are high. You'll just sacrifice a a small bit of monthly cash flow. It could be worthwhile to look at with your current lender.
  
  [email protected]818-269-7983
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Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
10mo
Quote from @John Matthew Johnston:

We are about to close on a 4 unit. We are using a DSCR loan. 30 year Fixed. PP penalty of 5 years. My Credit score is 833. Purchase price $450,000, 20% down ($90,000). I've attached a cost sheet. So you think the numbers are fair?
https://share.icloud.com/photos/0b0A-ezVp7vKOn108RhcFRUhg

This is very solid if you ask me..
6.25% on an 80 LTV loan with a 5 year PPP. You can reduce the points and increase the rate if you feel the cash to close is "high". But it is pretty fair based on the size of the loan.
If you are about to close on it, do it. The time you waste shopping another lender, is more valuable than saving a few bucks.
[email protected]818-269-7983
LuxePrivate Investments LLC 572 Reviews
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Vedant Mankad
Member since 2025 · 1 post · 0 votes
10mo
Quote from @John Matthew Johnston:

We are about to close on a 4 unit. We are using a DSCR loan. 30 year Fixed. PP penalty of 5 years. My Credit score is 833. Purchase price $450,000, 20% down ($90,000). I've attached a cost sheet. So you think the numbers are fair?
https://share.icloud.com/photos/0b0A-ezVp7vKOn108RhcFRUhg

i think this is good, if you still haven't closed i can help to look for some options
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John Matthew Johnston
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Investor · Beaver Falls, PA · Member since 2015 · 275 posts · 82 votes
10mo
@Jaycee Greene Ok thanks for the information, I will look into this.
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