How much is DSCR actually swinging your refi terms right now?

Question

Lenders seem to be tightening DSCR requirements lately. Anyone seeing real differences in refinance terms between a 1.0x and a 1.25x+ deal in this rate environment?

Mark Updegraff · Answer

I look at DSCR before I care what the lender’s minimum is.

If a property is sitting around 1.0x, the bigger problem for me isn’t whether somebody will make the loan. It’s that there’s almost no margin for an insurance increase, tax change, vacancy or unexpected repair.

On multifamily I generally want to see something around 1.20x or better in my own underwriting even if a lender is willing to stretch further.

I’d also model the refinance at several loan amounts instead of just asking “what’s my max proceeds?” Sometimes leaving some equity in the deal and preserving breathing room produces a much healthier investment than squeezing every possible dollar out at refi.

Stacy Raskin · Answer

There's options for DSCR with a 1.0 ratio that has favorable investor terms- just as favorable as 1.25+. Loan programs vary depending on the lender. Options vary depending on the number of units. Generally DSCR loan programs break down differently between 1-4 units, 5-8 units and 9+ units but this varies based on the lender. These loan programs will have different underwriting guidelines.

A mortgage broker that is experienced and specializes in DSCR loans can help with a real estate investor in finding the best options as an experienced mortgage broker has access to DSCR lenders that don't advertise directly to the public. Happy to connect to discuss further.