DSCR loan for student housing

Member since 2023 · 3 posts · 2 votes

I'm a first time investor considering buying a rental home for my daughter and her gaggle of roommates on a college campus. Could I use a DSCR loan? I would not be living there, but my child would. All roommates would be paying rent. Thank you!

1 Reply

121 views

Most Popular Reply

Robin SimonBusiness Member

Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes

Quote from @Dustin Lauer:

@Becky Swenson

The short answer is yes.

long answer is the lease or leases can be a little tricky post closing so it’s good idea to be transparent about your strategy with whoever you end up working with, and as soon as you can before closing take a good read of the documents.

Agreed - its generally a bit more challenging if its true "student housing" as rent-by-the-room is generally prohibited for DSCR. Should be fully upfront and aim for a property that could work just as easily as a standard single family rental too

[email protected]

Harpoon Capital514 Reviews

Website View Page

12 Reply

See this reply in the discussion

9 Replies

Jump to latestLatest

Sort by

Logan Singleton
Lender · Boston, MA · Member since 2023 · 415 posts · 95 votes
2y
Hi @Becky Swenson,

Yes, you can use a DSCR loan to finance student housing. Most lenders will look for 20% down right now. The rates range from 8.250 - 9.750% , depending on FICO and LTV. Please feel free to reach out if you have any additional questions.
0 Reply
Becky Swenson
OP
Member since 2023 · 3 posts · 2 votes
2y
Thank you @Logan Singleton. That's great!
0 Reply
Dustin Lauer
Lender · Orlando, FL · Member since 2016 · 340 posts · 115 votes
2y
@Becky Swenson
The short answer is yes.
long answer is the lease or leases can be a little tricky post closing so it’s good idea to be transparent about your strategy with whoever you end up working with, and as soon as you can before closing take a good read of the documents.
0 Reply
Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
2y
Quote from @Dustin Lauer:

@Becky Swenson
The short answer is yes.
long answer is the lease or leases can be a little tricky post closing so it’s good idea to be transparent about your strategy with whoever you end up working with, and as soon as you can before closing take a good read of the documents.

Agreed - its generally a bit more challenging if its true "student housing" as rent-by-the-room is generally prohibited for DSCR. Should be fully upfront and aim for a property that could work just as easily as a standard single family rental too
[email protected]
Harpoon Capital514 Reviews
Website View Page
12 Reply
Becky Swenson
OP
Member since 2023 · 3 posts · 2 votes
2y
Thank you! I should clarify I'm looking for a single family home that would be rented to 3-4 college students. One lease.
1 Reply
David ChungPro Member
Lender · Orange County, CA · Member since 2017 · 56 posts · 14 votes
2y
Quote from @Becky Swenson:

I'm a first time investor considering buying a rental home for my daughter and her gaggle of roommates on a college campus. Could I use a DSCR loan? I would not be living there, but my child would. All roommates would be paying rent. Thank you!

Hate to be the dissenting voice here, but if you fully disclose that your child would be occupying the property you might run into some trouble with the non-owner occupancy that is usually required with a DSCR loan - your child falls into the category of immediate family and many undewriters would assume that if your child didn't pay their rent, either you wouldn't evict them or you would pay the rent for them, which then affects the cash-flow on the property level, which then affects the DSCR. This would change the qualification for the property. Additionally, there is usually a document in the loan doc set that has you certifying that no family members would be occupying the subject property. I would suggest you use a different non-qm loan product that allows for family members to occupy but doesn't require you to make it a primary residence.
[email protected]714-334-8110
0 Reply
Damien CobbsPro Member
Real Estate Investor · Chesterfield, VA · Member since 2009 · 11 posts · 0 votes
2y
Quote from @David Chung:

Quote from @Becky Swenson:

I'm a first time investor considering buying a rental home for my daughter and her gaggle of roommates on a college campus. Could I use a DSCR loan? I would not be living there, but my child would. All roommates would be paying rent. Thank you!

Hate to be the dissenting voice here, but if you fully disclose that your child would be occupying the property you might run into some trouble with the non-owner occupancy that is usually required with a DSCR loan - your child falls into the category of immediate family and many undewriters would assume that if your child didn't pay their rent, either you wouldn't evict them or you would pay the rent for them, which then affects the cash-flow on the property level, which then affects the DSCR. This would change the qualification for the property. Additionally, there is usually a document in the loan doc set that has you certifying that no family members would be occupying the subject property. I would suggest you use a different non-qm loan product that allows for family members to occupy but doesn't require you to make it a primary residence.

Can you suggest some non-qm loan products that allows for family members to occupy but doesn't require you to make it a primary residence? I am interested in doing the same as the OP.
0 Reply
David ChungPro Member
Lender · Orange County, CA · Member since 2017 · 56 posts · 14 votes
2y
Quote from @Damien Cobbs:

Quote from @David Chung:

Quote from @Becky Swenson:

I'm a first time investor considering buying a rental home for my daughter and her gaggle of roommates on a college campus. Could I use a DSCR loan? I would not be living there, but my child would. All roommates would be paying rent. Thank you!

Hate to be the dissenting voice here, but if you fully disclose that your child would be occupying the property you might run into some trouble with the non-owner occupancy that is usually required with a DSCR loan - your child falls into the category of immediate family and many undewriters would assume that if your child didn't pay their rent, either you wouldn't evict them or you would pay the rent for them, which then affects the cash-flow on the property level, which then affects the DSCR. This would change the qualification for the property. Additionally, there is usually a document in the loan doc set that has you certifying that no family members would be occupying the subject property. I would suggest you use a different non-qm loan product that allows for family members to occupy but doesn't require you to make it a primary residence.

Can you suggest some non-qm loan products that allows for family members to occupy but doesn't require you to make it a primary residence? I am interested in doing the same as the OP.

I can't at the moment but I would recommend you contact lookup a loan broker in your area who specializes in out of the box lending.
[email protected]714-334-8110
0 Reply
Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
1w
Hey Becky,
Most DSCR lenders will not allow any relatives to live in the property. If they see she is on the lease, it will be a huge flag for most lenders.
Student housing is still possible with a DSCR loan however, since they are business-purpose only loans, many lenders have a strict rule of not allowing any relatives or borrowers to live In the property.
[email protected]818-269-7983
LuxePrivate Investments LLC 572 Reviews
Website View Page
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.