Can you get a DSCR loan with bad credit?

Question

If you have a down payment can you get approved for a DSCR loan on a duplex? If so, how much down payment should I be ready to put down? Thank you all in advance for your help.

Tom S. · Answer

@Tavaris Council  Agreed with the above post, I have a few duplexes and they're commercial loans.  But they require a personal guarantee and therefore they used my personal credit to qualify.  Depends a lot on what you mean by "bad credit".  I recall when I applied I had a 30 day late from 5 years ago, and they were able to document and overlook that.  I applied for commercial because the place wasn't livable and I needed purchase + rehab financing.

All that said, with the pandemic lenders are generally tightening lending standards.  Even with credit cards I read a recent article 1/3 of people have reported lenders lowering credit limits or closing accounts.

Tavaris Council · Answer

@Tom S. Thank you for that info.

Tavaris Council · Answer

@Jaysen Medhurst thought it would be easier to get approved based off the property’s cash flow due to credit challenges.

Jaysen Medhurst · Answer

You can certainly do a commercial loan on a duplex, @Tavaris Council. Rate will be higher, term might be shorter, and you'll have to put down at least 20-25%. Since it's still a residential property, the appraisal will be based on comps, not it's profitability.

Why do you want to go with a commercial loan?