Personal loan for deposit for DSCR

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  • Jackson Ebersole
    Member since 2024 · 84 posts · 48 votes
    2y

    Hi Duane,

    That will definitely affect your DSCR as you'll be paying interest and amortizing the principal on the loan. Definitely take it into consideration in your DSCR calculation. I wouldn't recommend getting a loan for a down payment but if you do be careful cause your DSCR might not cashflow as well.

    Let me know if you want to discuss this any further or have any other questions.

    Best,

    Jackson

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  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    2y

    I believe  @Duane A. Snow is asking about the deposit required to go into escrow not the down payment. Financing either is a bad idea and will raise a red flag with a lender who will look at sources and uses of the loan request. If you have no liquidity I highly doubt a lender will approve your loan request. Beyond the underwriting component what exactly is the end goal  here? You don't have enough money for the deposit so how  do you plan to obtain the necessary funds to cover the closing costs? It seems you are in over your head and should take a step back and reset expectations. It doesn't appear you are in position to purchase real estate at this time. 

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  • Brittany MinocchiBusiness Member
    Lender · Massillon, OH · Member since 2022 · 1k+ posts · 486 votes
    2y

    For that to fly, you'd need a lender that doesn't source down payment funds. They're out there, but that may not be a financially wise decision....

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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2y

    Most lenders will source the funds and will not finance this if you are using it towards the down payment of the property. 

    Lenders WILL allow a secured loan ( like a second mortgage, HELOC, Cash out refi loan). It can't be an unsecured personal loan.

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  • Duane A. Snow
    OP
    WI · Member since 2023 · 74 posts · 24 votes
    2y
    Quote from @Duane A. Snow:

    Can I do this without it messing up financing on a DSCR?


    I would love to talk to you more about this. I am ready to secure another property for STR that we will do all the work ourselves being that it is 6 houses away from our main house.

    Duane

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  • Scott WolfPro Member
    Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 959 votes
    2y
    Quote from @Duane A. Snow:

    Can I do this without it messing up financing on a DSCR?


     Hi Duane, this can be done, but as others have said, it may not be the wisest financial decision.  

    My firm can do it, but the funds need to season in your account for a month.  Happy to discuss if you'd like to learn more.

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  • Duane A. Snow
    OP
    WI · Member since 2023 · 74 posts · 24 votes
    2y
    Quote from @Jackson Ebersole:

    Hi Duane,

    That will definitely affect your DSCR as you'll be paying interest and amortizing the principal on the loan. Definitely take it into consideration in your DSCR calculation. I wouldn't recommend getting a loan for a down payment but if you do be careful cause your DSCR might not cashflow as well.

    Let me know if you want to discuss this any further or have any other questions.

    Best,

    Jackson


     Jackson I would love to discuss this with you.

    Duan

    0Reply
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