All Forum Posts by: Stacy Raskin

 Sure, you're welcome! 

is this an investment property where you are not living there? If so, there are lenders that can finance up to 90% of the purchase price and 100% of the renovation budget (done on draws for the reno budget). The options depend on the state you're in and your credit. Happy to discuss further. 

DSCR loans are helpful since they won't use your DTI or DTI ratios. They also have less paperwork than a conventional loan. As of this posting, the rates are in the 6s and 7s depending on credit, LTV- more on that below.

Working with a mortgage broker can be helpful since DSCR lenders are specialized lenders who are generally not advertising directly to the public the ways that traditional banks or credit unions do. If traditional companies do offer DSCR loans, it's usually with a lower LTV or less favorable terms. Specialized DSCR lenders generally have more favorable terms since they have guidelines that facilitate investors on the back end purchasing these loans to replenish the cash for new loans.

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. 

 Thank you Andrew- I appreciate it!

I don't know of anyone- in general: Mobile homes are a lot harder to get financing for as investment properties. It's also harder to get financing for properties that appraise for under $75,000. 

Hi Marcus, I'm a mortgage broker who works with investors. i do a lot of work with DSCR loans.

Here's some info on DSCR loans that people have told me was helpful.

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. 

@Sharon Johnson, there are loan options if it appraises for at least $75,000. Some things to consider are if the property is in a rural location instead of urban or suburban, this will limit LTV. This is based on what the appraiser marks on the form.

Also, whether a condo is warrantable or non warrantable will affect LTV. Some reasons for being non warrantable are investor concentration (too many investors and not enough home owners) or litigation against the HOA.

Happy to connect to discuss further. 

There are lenders who will work with a new flipper if you have good credit. Depending on the property and your credit, they will lend up to 90% of the purchase price and 100% of the rehab budget. This program is for 1-4 units and can't be in a rural location. The rehab budget is done on draws so it's reimbursing you after you pay for the materials and/or labor. This is typically called a hard money loan or HML.

Generally once a property if rehabbed, the flipper will sell the property or convert the rental property to longer term financing such as a DSCR loan.

Happy to discuss further.

A couple of items to consider including loan program options. For conventional loans you can't put the property in an LLC.

DSCR loans can be helpful if you don't have the debt to income ratios to work or you have issues with demonstrating income. This often happens with people who don't have traditional W2 jobs. Many self employed people or business owners write off quite a bit of expenses which reduces their net income on their taxes which is used for the self employed or business owner in how a conventional income loan is calculated.

Also, DSCR loans are less paperwork especially if an investor has multiple properties (the less paperwork is significantly less when an investor has multiple properties but is less when comparing a one property conventional loan to a DSCR loan).

Generally DSCR loans require a personal guarantor. Some DSCR lenders will not report the DSCR loan to credit bureaus but that varies. Working with a mortgage broker can be helpful as they have relationships with non-qualified (Non-QM) lenders that can help an investor get better LTVs and underwriting guidelines. Lenders who specialize in non-QM loans generally have better guidelines for investors. This is compared to large banks or credit unions or generally don't have as good as terms. It may be because many lenders sell their loans at the end of the loan process to replenish liquidity for new loans so the non-QM lenders have investors who are willing to buy these loans while these other companies don't. Non-QM lenders generally don't advertise directly to the public which is why working with a mortgage broker can be helpful.

There are DSCR lenders for 1-4 units who have 20% down programs for 680+ middle mortgage FICO scores.

Happy to connect to discuss further. 

Get Cash Out of Your Investment Property with no Personal Income Needed for the Loan- Pricing Special- 0.25% off for all loans locked in October

DSCR loans are a great way to supercharge your investment goals and net worth. Depending on the loan program, the mortgage will only be qualified off of your middle credit FICO credit score, down payment and market or actual rents.

If you aren't looking to get cash out, you can also refinance out of a shorter term hard money loan or any loan to have a fixed 30 year mortgage term with a lower rate.

More details:

• Loans available for cash-out and purchase
• Credits score down to 620 (for loans under $100K, middle mortgage credit score is 680). Minimum $75K appraised value needed for a purchase or refinance.
• LTV are up to 75% for cash out.
• Cash out limits depend on property value, credit score and if the property is vacant.
• Non-warrantable condos and condotels permitted for loans above $100K.
• Rate buydown feature available.
• DSCR (lower of gross rent lease or Appraisal Form 1007/216 rent divided by PITIA) as low as 1.0x.
• Short term rentals can be structured off of 12 month short term rental history for loans above $100K.
• Fixed 30 year terms or fixed 40 year terms of 10 years of interest only payments followed by 30 years fully amortized for loans above $100K.
• Loan options in most states.
• Inquire for additional details.

I look forward to hearing from you.