All Forum Posts by: Matthew Gaddis

I have seen a few DSCR and Non-Qm, Construction programs, most of them are not super great, but I guess they get they job done and I think there is maybe a place for them as a short-term option.

Here are some specs (based off of my experience):

Rates are higher so today they start at 8.75% and rate add ons for occupancy, number of units and doc type (full, DSCR and Bank statement)

Fees are higher, some have 3% in points on the loan for loan administration and lender fees for loans under $1 million, 2% pts for loan amounts over $1 million. If you work with a broker, then you might have to add any borrower paid comp they earn on the loan.

You don’t lock the loan until 60 days before completion of the construction.

Minimum Credit score is 680. Up to $2 million loan size with exceptions to $3 million.

Investment is 80% Max LTV and can go down based on, number of units, credit score and doc type.
Minimum DSCR 1.0

6 months Reserve for loans up to $1 million, 9 months for loans from $1 to $2 million.

Hey Matt,

Did you find a USDA lender in WA? If not, I can take a look at it.

You could get delayed financing which would allow you to pull your cash back out or find a lender with a no-seasoning cash-out refinance. 

That is expensive. 

I am seeing a range from 8.125%-8.5% with a 5 yr PPP and 2 points total on the deal (no other origination fees).  

9.125% is the starting rate for no PPP and no discount points. 

I am not sure what is typically the case. There are 2 investors that I know of that offer DSCR options. The pricing is terrible, but they exist.

Yes - Actually a few lenders have just come out with Non-QM Second mortgages for Owner-Occupied and Non-Owner Occupied homes. I haven't seen a HELOC yet. Full-Doc go up to 85% CLTV and a DSCR/Bank Statement only options go up to 75% CLTV.

It seems likely that a product like that would work for you, but they are higher interest, so you would probably need to be looking to refinance out of it shortly after completion, once the new equity is realized. 

My 2 cents would be to look into something like that for the down payment on an investment construction loan and close them concurrently.  

There are a few lenders that offer no seasoning for Cash-out refi's. They are capped at 75% LTV, but you can pull a little value out of the property, if it is there. Pretty much all of them are DSCR loans that need >1 DSCR.

It is possible to get up to 85% LTV, if you use a R/T refinance on the first loan and use an investment second mortgage or HELOC.

Otherwise, you are probably looking at a delayed financing situation where you can get back the purchase price + any documented expenses until you have seasoned the title for >6 Months. 

There are a few Lenders that offer NOO Seconds or HELOCS.

The highest CLTV that I have seen is 85%. They are a bit higher in terms of interest rates, but they let you keep a lower interest first position loan in place and the blended interest rate can be better than doing a cash-out refinance.

Do you have more experience with fix & flip projects or ground-up construction? The pricing will definitely be worse, if you have limited experience.

Do you have a GC managing the project? You may be able to include their history for experience purposes. 

The current appraisal will work in your favor. What kind of appraisal is it and what is the appraised value? 

There are a few lenders who would look at a project like this. Most cap at 80% LTC and 65% ARV.

There are a few Non-QM Lenders that allow for No seasoning, Cash-out refinances. Most cap at 75% LTV.

The Non-Qm rates are usually higher than conventional rates, but lower than hard money. 

This deal could be a DSCR loan, but the rates could be better on a Full-doc, Non-QM. Happy to take a look at the deal, fi you would like.