is 95% LTV for a DSCR Loan that is 2.2 possible?

Question

what the title says.

Robin Simon · Answer

No - absolute max for DSCR is 85% LTV and that is extremely rare and typically not workable in this rate environment anyways.

Standard/common max is 80% (acquisition and rate-term refinances) and 75% Cash-Out Refis

Corby Goade · Answer

If you ever see someone offering terms that are too good to be true, you might as well just post your SS# and banking information on IG. It's always a scam.

Ryne Sweeney · Answer

It could be 10:1, you could have an 800 FICO, and $5 mill liquid. No lender will lend that high leverage.

Adonis Williams · Answer

very unlikely . Most non-qm loan products will never have a 95% LTV due to the inherent risks associated with these type of loans not being traditionally backed by fannie or freddie (investment banks). To a point made by another person who commented, you may be able to have a lender do a 'one-off' portfolio loan at a 95% LTV if they trust you enough .

good luck.

Elias Halvorson · Answer

Short answer, no - not to my knowledge. You may get EXTREMELY lucky and find one for 15% (if they get approval from management), but you will not find one for 5%.

Adam Levine · Answer

It sounds like an ad you might’ve seen for fix-and-flip loans—lenders have been getting more aggressive in that space. In reality, it’s pretty rare to find a DSCR loan going up to 95% LTV. Right now, I’m seeing max LTVs closer to 80% on purchases, though before COVID, we sometimes went up to 85%.

Also, keep an eye out for lenders who promise amazing terms but demand large commitment fees upfront. Some will dangle out-of-market offers in a term sheet, then ask for substantial sums of money right away. Legitimate lenders may charge a small application fee (around $250) to verify you’re serious, but if someone’s asking for thousands with no real intention of closing, that’s a huge red flag.

On a more positive note, there are creative financing approaches out there. If you have a seller-financed deal, I can help you line up a DSCR loan and set up a second position behind it so you don’t have to come out of pocket much. Feel free to reach out if you want more details!

Stacy Raskin · Answer

No. I have seen 85% LTV on a purchase and 80% on a cash out refinance. This depends on the details.  A higher LTV generally requires a higher DSCR ratio such as 1.25 instead of 1. It varies by program.

To learn more about DSCR programs:

DSCR loans won't use your income to underwrite the loan.

DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.

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

1. Credit score- the higher the best. 760-780+ generally gets best pricing for investment property loans with most lenders. From there every 20 point increment affect pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then going down to 740-759 and so on.

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. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.

4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). 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. This criteria is for 1-4 and 5-8 unit programs.

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 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

If a purchase, you also generally need reserves / savings to show you have 3-6 month payments of PITIA (principal / interest (mortgage payment), property taxes and insurance and HOA (if applicable). If a cash out refinance, many lenders will allow the cash out to satisfy the reserves requirement.

DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.

Happy to connect to discuss further.

Jeffrey Blackman · Answer

Not possible, 85% max LTV on a purchase or straight refi, 75% max LTV on a cash out refi.

Deborah Wodell · Answer

not possible!

Brittany Minocchi · Answer

Nope.

is 95% LTV for a DSCR Loan that is 2.2 possible?

is 95% LTV for a DSCR Loan that is 2.2 possible?

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