DSCR LOANS recommendations in St. Louis

[Eran Hahn]

hi. does anyone have any information regarding DSCR loans in St. Louis, MO?

any advice as to which banks or credit unions offer the best deals would be appreciated

Thank you

[Stacy Raskin]

@Eran Hahn, I could help you with a DSCR loan in that area. Not sure how much you know about DSCR loans but they don't rely on your income. DSCR loans typically require a 20-25% down payment with 25% down payment getting a better rate.

Your credit score will be a deciding factor for the rate and fees you pay. The higher your credit score the better. Typically lenders divide up credit scores in multiple buckets with 760+ getting the best rate for some lenders while others it's 720, 740 or 760 gets the best rate pricing. Most lenders break scores in 20 point buckets so a 720 score would get a better rate than 700-719. Most lenders will use the middle of your three credit scores and if there's more than one applicant, the lender will go with the lower of the two credit scores. Most lenders use FICO credit mortgage credit scores.

Here's a bit more in detail about how rates are calculated for DSCR loans:

1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

3. Are you cash flowing the property? Is your DSCR ratio greater than 1-meaning are you cash flowing. Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. I've included an example below to help illustrate this.

So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

See DSCR ratio example below:

DSCR < 1

Principal + Interest = $1,700

Taxes = $350

Insurance = $100

Association Dues = $50

Total PITIA = $2200

Rent = $2000

DSCR = Rent/PITIA = 2000/2200 = 0.91

Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

DSCR >1

Principal + Interest = $1,500

Taxes = $250

Insurance = $100

Association Dues = $25

Total PITIA = $1875

Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

Lender terms and fees vary widely. As a mortgage broker, I shop my clients' loan to get them the best possible loan and the least fees while helping them to reach their investment goals. I'll send you a message as well.