All Forum Posts by: Stacy Raskin

There's lenders that go down to $55K loan amount and a $75K value. 

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? Is your DSCR ratio greater than 1-meaning are you cash flowing. 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.

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.

 Thank you Benjamin- I appreciate that!

@Jonathan Dye, I can assist.

In case helpful- more about DSCR loans-

There are lenders that will do purchase DSCR LTVs up to 80% for a 1-4 purchase with a DSCR 1 ratio and a strong credit score. Cash out rates are at max 75% from what I've seen depending on the borrower's middle mortgage FICO score.

There are factors that really weigh into the rate including the length of the prepayment penalty and the LTV.

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 as far what factors the lender uses to underwrite the loan? Is your DSCR ratio greater than 1-meaning are you cash flowing when comparing the actual or projected monthly rent against the monthly mortgage, property taxes, 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.

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.

@Michael Bayrakeri, you can do a DSCR loan and close in an individual or an LLC. There are 30 year fixed options for these types of loans.

Using a HELOC to pay cash to buy the property may impact refinancing options to pull the cash back out since some lenders will either want a 6 month seasoning period before they will do the refinance or they will require you to pay back your HELOC if you do the loan before the 6 months are up. This is not widely known so it can throw a wrench in the plan if you're aren't prepared.

There are lenders that will do purchase DSCR LTVs up to 80% for a 1-4 purchase with a DSCR 1 ratio and a strong credit score. Cash out rates are at max 75% from what I've seen depending on the borrower's middle mortgage FICO score.

There are factors that really weigh into the rate including the length of the prepayment penalty and the LTV.

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 as far what factors the lender uses to underwrite the loan? Is your DSCR ratio greater than 1-meaning are you cash flowing when comparing the actual or projected monthly rent against the monthly mortgage, property taxes, 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.

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

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.

There are lenders that will do purchase DSCR LTVs up to 80% for a 1-4 purchase with a DSCR 1 ratio and a strong credit score. Cash out rates are at max 75% from what I've seen depending on the borrower's middle mortgage FICO score.

There are factors that really weigh into the rate including the length of the prepayment penalty and the LTV.

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 as far what factors the lender uses to underwrite the loan? Is your DSCR ratio greater than 1-meaning are you cash flowing when comparing the actual or projected monthly rent against the monthly mortgage, property taxes, 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.

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.

@Lorena Cooke, our company specializes in the space you mentioned. We work with investors on rental properties- many who are looking at 1-4 unit or 5-8 unit programs. 

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 Arizona, Idaho, Iowa, Michigan, Minnesota, Nevada, North Dakota, Oregon, South Dakota and Utah. I look forward to hearing from you.

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 Arizona, Idaho, Iowa, Michigan, Minnesota, Nevada, North Dakota, Oregon, South Dakota and Utah. Inquire for additional details. I look forward to hearing from you.

There are lenders who fund at least millions of dollars of DSCR loans monthly who do a DSCR 1 ratio. The same lenders will do a .75 ratio but the terms aren't as favorable to the borrower.

The expenses I mentioned are what lenders consider for DSCR loans for how the lenders structure the DSCR ratio and whether they will approve and fund the loan.

From a lender's perspective for a DSCR ratio and getting a loan, the property cash flows as the ratio is a 1 or above. A lender doesn't consider any of the fees you mentioned when structuring a DSCR loan ratio and approving a loan.