All Forum Posts by: Stacy Raskin

Fix & Flip Loans-Financing up to 90% of Purchase Price & 100% Rehab- Up to 75% of ARV

As a mortgage broker, I work with different lenders that do Fix & Flip loans. The programs are created for investors who buy distressed homes, repairing them and then either selling them or holding them for rental income and flipping the hard money loan to a long term DSCR loan where the rents will underwrite the loan.

Program highlights:

• -Any level of investor experience
• -Funding in as little as 10 days
• -Credit scores as low as 660
• -Non-owner occupied Single Family, Multi Family up to 4 units property types
• -Purchase Loan Amount – up to 90% of Cost
• -Rehab Loan Amount – up to 100% of Cost
• -75% maximum after repair value
• -12 to 24 month loan term with Interest Only payments. At the end of term, can either sell or refinance into a longer term fixed DSCR rental property loan. This can be done earlier as well if the property is ready before the term is up.
  -Decisions and term sheets are issued quickly. Terms will depend mainly on borrower's credit score and location of property. Experience is a factor but is secondary to the other criteria.Loans offered in all U.S. states except for Idaho, Iowa, North Dakota, South Dakota and Utah.

There are more lending options in: AZ, Washington D.C., AR, AL, CA, CO, CT, FL, GA, IL, IN, KS, KY, MA, MD, MI, MN, MO, NC, NJ, NV, NY, OH, OK, OR, PA, SC, TN, TX, VA, WA, WI, and WV.

I look forward to hearing from you.

I would recommend working with a lender or mortgage broker who has an NMLS license. To get an NMLS license, you need to take relevant courses and there is a difficult test to get a NMLS license that more than half of the people fail that take it on their first try.

A lender doesn't need a license to do DSCR loans in many states but if they have a NMLS license in any state then they have a license they are going to try to keep and be better educated in lending overall.

@Adam Guy, private lenders and non-QM lenders can change terms at the last minute. Not the people you want to work with. Generally working with mortgage brokers or large lenders that have a good reputation and established guidelines is the way to go. They are a lot less likely to change terms as they have a reputation to protect and an established system of doing loans. There work like well oiled machines. 

Also, there are lenders that will quote really low rates that aren't possible in the current market and once you have paid for the appraisal and wasted a lot of your time, they will change the terms and up the rates because they figure you are in deep enough so you will go along with it. 

A lot of clients set up rental properties with DSCR loans which requires less paperwork. These generally close in 21-30 days or less unless problems come back on the appraisal or something else in the process like borrower fraud. I've never heard of 90 days for a loan to close unless there was major issues that were discovered in the appraisal and they had to be remedied before the loan can fund.

More info on DSCR 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+ 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. 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

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. 

@Louise L., there are fix and flip loans if the numbers work with the ARV. Typically some terms you might see are minimum 660 credit scores, up to 90% loan to cost (LTC) and 100% LTC on renovation up to $250k. There are expanded rehab limits (i.e. $300k-500k) available for borrowers that meet eligibility criteria. Up to 75% LTV ARV. Loan amounts $100,000 to $1,000,000. Interest only terms from 6-24 months.

Happy to connect to discuss further. 

@Gilberto Ramirez III, will you be living there or will this be a rental property? If a rental property, generally you will need 20% down. Credit score is also a factor for rental properties for how much the lender will lend.  

Loan options will depend on if a rental or primary home. 

For some lenders, If a rental property, you would possible be able to get a fix and flip loan with a credit from 660 and above but it will depend on the location, the property, and other factors that the lender will consider to calculate risk.

@Amanda Ferguson, you can either go conventional where your income and debt to income (DTI) ratios are used to structure the loan or you can use DSCR loans which will structure the loan based on the appraised value and rental income.

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

More on DSCR loans: 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+ 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. 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

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. 

For most lenders, there are prepayment penalties from 1 year to 5 years. The shorter the prepayment term, the more impact it has on the rate. So a one year prepayment will drive the rate higher than a 5 year prepayment penalty. There are some states that don't allow prepayment penalties so the lender compensates with a higher rate. For some lenders, a 3 year prepay is neutral on the rate as as factor and a 5 year prepay is a 1/2 point reduction, a 4 year prepay is a .25 reduction and a 2 year prepay is a .25 add to the rate and a 1 year prepay is a .5 add to the rate. The language shouldn't be vague or you aren't talking to the right lender. You can decide which term you want. 

More info on DSCR loans in case 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+ 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. 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

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. 

HELOCs are hard to find for investment properties and second closed end mortgages on investment properties have high rates in the 10-12's (even with good credit, etc). The rate is based on that the lender sees is a borrower is more likely to have a investment property go into foreclosure compared to a primary home so the lender sees a higher risk of non payment and less likely to get any money after the first mortgage holder is paid off from the foreclosure sale. 

It is easier and cheaper to take out a HELOC on your primary home depending on the details of draw periods etc.

Depending on your market, cash may not be necessary to win bids. This isn't 2021. There is a lot less competition right now generally speaking. There are borrowers who are using seller credits to buy down their rate and financing the deal. Once again, it depends on your specific market so important to know the market you're buying in regarding the supply and demand. 

You can also pay in cash and do delayed financing where you pull the cash out and put a mortgage on the property after closing.

Regarding DSCR loans- generally better terms and rates on 1-4 units.

More info on DSCR loans in case 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+ 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. 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

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.

Get Cash Out of Your Investment Property with no Personal Income Needed for the Loan

Pricing Specials for Loans where the loan is submitted and locked in March

This special is good for purchases, rate/term & refinance cash-out loans = 0.5% off the usual rate

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 or use the special for savings to purchase an investment property.

More details:

• Loans available for cash-out
• Credits score down to 620 (for loans under $100K, middle mortgage credit score is 680)
• 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.
• Inquire for additional details.

For the pricing special, I work on DSCR loans in all U.S. states except for Alaska, Minnesota, Michigan, Arizona, Nevada, North & South Dakota, Idaho, Illinois, New Jersey, Vermont, New York, Virginia, Wyoming, Oregon and Utah.

I look forward to hearing from you.

@Praveen Van, sometimes loans that are in an LLC name is reported on your personal credit if you're the guarantor on the loan. It depends on who the initial lender sells and services the loan after funding (most DSCR lenders sell off the loans at the end of the process). The big difference between conventional and DSCR property financing is that the lender is looking at the rental income and not the borrower's individual income / DTI ratio (income is only looked at for reserves and cash to close).

More info on DSCR loans in case helpful:

As mentioned above, 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+ 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. 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

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.