All Forum Posts by: Stacy Raskin

 As far as what you have to pay upfront it's the appraisal and sometimes a credit report. For conventional investment property loans, since it's most likely a qualified mortgage (QM), if a 1-4 unit investment property, there's certain rules that the lender needs to follow:

-Points and fees are less than or equal to 3% of the loan amount (for loan amounts less than $100k higher percentage thresholds are allowed);
-No risky features like negative amortization, interest-only, or balloon loans 
-Maximum loan term is less than or equal to 30 years.

Generally lender or mortgage broker compensation is lender paid or borrower paid for conventional loans. Borrower paid means a borrower is paying a fee at the end of the transaction- usually around 2%. Lender paid is that that the borrower is paying the fee but it's built into the rate so it takes the rate from let's say a 8.25% to a 8.75%. Some lenders don't disclose this fee structure if lender paid and conventional but all lenders are brokers are paid for their work- some just don't disclose it. It's a good idea to work with lenders or brokers who will discuss these details with you so you can make informed decisions. 

Loan Stream. They are a wholesale lender that works with mortgage brokers. Not sure if they work directly with consumers.

 @Phyllis Kelly, you will have more lending options if the loan is $100K and above. There are lenders that will do loans going to a $75K appraised value and a $50K loan amount but there's a lot less of them from what I see compared to $100K loan amount and up options. 

Also, if the appraiser marks any repairs that concern the lender on the appraisal, then you will have to address those to have the loan close. An example of a repair that would concern a lender is a cracked foundation.

If tenants are month the month, some lenders will use a market rent survey as the rent to offset the expenses instead of the current rent. 

If you have the new tenants on a termed lease such as one year, most lenders will use that rent as the rent to offset the expenses. So if the new rent is $1,400, you need the new mortgage, property taxes and insurance, (HOA if applicable), to be at $1,400 or below to have the DSCR 1 ratio where there are lenders that will give better pricing and terms such as higher LTV.

@Phyllis Kelly, I haven't seen HELOCs for investment properties lately. I have seen fixed 2nd but those typically have much higher interest rates than a 1st mortgage and are obtained by borrowers who already have 1st mortgages. 

Depending on the state of the property of the interior, if the appraiser can mark it as "as is" and not "subject to" meaning that the property is habitable now and not subject to work being completed, then you can get a DSCR loan since it's an investment property. If vacant, the appraiser will do a market rent survey and the appraiser's average market rent will be the number used to offset the expenses in the DSCR ratio for the lender.

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

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 that I've seen.

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.

@Peter Fennig, if over a $100K loan, there are DSCR lenders that will refinance with a middle mortgage credit score of 620 and above if the property is rehabbed and an appraiser will sign off on it being habitable. The lender will use the appraiser market rent survey if vacant.

Also, depending on if the properties are in your individual names or an LLC, there are different rules as to what credit score can be used for the refi.

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 pull cash out of a property as it appreciates allowing you to reinvest money.

We are headed into some slower times for rentals. If a unit is priced and marketed correctly, generally, you should have an approved rental application in 30 days. This can extend out in November and December. 

I have seen professional photos or professional looking photos help with renting out a property. You want to get people interested enough to call. 

Price is definitely a factor but if you think it's comparable to what's out there, I would try the photo change first. I've seen that make a difference. 

DSCR loans are a great way to refinance out of your hard money loan to fixed 30 year or 40 year long term financing. Depending on the loan program, the mortgage will only be qualified off of your middle credit FICO credit score and market or actual rents.

Program highlights:


• Get up to 75% of the cash you paid for the property. If improvements were made, the lender will consider based on the work done and work receipts to get more of the money you put back then the 75% purchase price. Some exceptions have been made for using the new appraisal value if considerable work done and reflected on new appraisal value and remodeling receipts. If greater than 6 months since the hard money loan, the lender will consider the new appraisal as the maximum LTV.
• Loans available for cash-out or rate and term.
• Credits score down to 620
• 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.
• Rate buydown feature available.
• DSCR (lower of gross rent lease or Appraisal Form 1007/216 rent divided by PITIA) as low as 1.0x
• Non-owner occupied Single Family, Multi Family up to 4 unit property types
• Purchase Loan Amount – from $150K to $3,000,000. Exceptions can be made below and above- loans generally don't go below $100K.
• Fixed 30 year full amortized loan terms as well as 40 year fixed rate with 10 year interest only period then a 30 year fully amortized mortgage.

I work on DSCR loans in all U.S. states except for Minnesota, Nevada, North Dakota, Oregon, South Dakota and Utah. For loans being refinanced before 6 months since refinance or purchase, additional state restrictions apply. Inquire for additional details. I look forward to hearing from you.

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.

More details:

• Loans available for cash-out
• Credits score down to 620
• 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.
• Rate buydown feature available.
• DSCR (lower of gross rent lease or 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.
• Fixed 30 year terms or fixed 40 year terms of 10 years of interest only payments followed by 30 years fully amortized.
• Inquire for additional details.

I work on DSCR loans in all U.S. states except for Minnesota, Nevada, North Dakota, Oregon, South Dakota and Utah. I look forward to hearing from you.

@Jessica Stern, the most I'm seeing right now is 75% max LTV for cash out for DSCR lenders. Also, that's with 6 months seasoning. There are lenders that will do 0 seasoning based on purchase price and receipts for remodel. There are some that will do 0 seasoning based on the new appraisal if a substantial remodel. These lenders that do 0 seasoning will generally not go up to 75% LTV. Conventional lenders will generally not do a cash out refi with less than 6 months of seasoning.

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.

I'll send you a message as well. 

@James Barras, there are lenders that will do a 30 year fixed or a 40 year fixed DSCR loan and will let you vest in an LLC.

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

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

As I mentioned, 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.