All Forum Posts by: Stacy Raskin

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. They don't consider borrower income primarily beyond the ability to do a down payment.

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. 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. Market rents from the appraisal and/or the actual rents need to cover the mortgage payment, property insurance, taxes and HOA (if applicable).

4. Prepayment penalties range from 1-5 years and you get to decide the length of the term. The longer the term, the less of an impact on the rate.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 = $2200Rent = $2000DSCR = 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 loans can be used for purchases and for cash out refinances. Most lenders allow you to vest individually or as an LLC.

Rates for investment properties are only going to be lower if considerable equity left in the property. I've seen rates in the 7s for investment properties for 60% LTV or lower depending on the property and credit score but if looking to max out LTV for cash out, the rate will be higher. Also, it matters what type of loan product and credit score of the borrower as far as how the rate is calculated.

Hi Kellie, if you have the credit and the down payment, DSCR loans can help you to expand past conventional. 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.

@Brandon Gamblin, I'd be happy to connect. There are lenders that will do 30 year fixed or 40 year fixed terms. 

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.

There are lenders that will use AirDNA to structure the loan if a purchase if the borrower has previous real estate experience. The same lenders will need a 12 month short term rental history to do a cash out refinance. In both instances, they will apply a 20% expense factor. They will also need a 1.2 DSCR ratio.

If you're an experienced investor, there are lenders that will take the annual rent from AirDNA and take a 20% expense factor for a DSCR loan if a 1.2 ratio. Or if for easy Math, the expenses of mortgage taxes and insurance of $1,000 or less are supported against $1,200 of monthly rent.

Using AirDNA can be a better way to structure a DSCR loan since long term rent surveys often come in lower than expected which can be the deal impossible to do as the rent is too low on the survey to support the expenses. I've never heard of a lender allowing full seller financing for the contribution. I've heard of seller contributions for up to 6% 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. They don't consider borrower income.

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. 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. Market rents from the appraisal and/or the actual rents need to cover the mortgage payment, property insurance, taxes and HOA (if applicable).

4. Prepayment penalties range from 1-5 years and you get to decide the length of the term. The longer the term, the less of an impact on the rate.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 = $2200Rent = $2000DSCR = 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 loans can be used for purchases and for cash out refinances. Most lenders allow you to vest individually or as an LLC.

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 not off of your personal income.

More details:

• Loans available for purchase, cash-out and rate & term refinance
• 85% LTV for single family purchase only with a minimum middle credit score of 720. Purchase price up to $1.5M. DSCR ratio of 1.2 and must have previous real estate investor experience.
• Loan amounts up to $1,500,000. Minimum loan amount $100,000.
• LTV are up to 75% for cash out.
• 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.
• Single family home purchases that will be short term rentals can be structured off of AirDNA with a 20% expense factor- for this program only no first time investors. For this product only DSCR ratio must be 1.2 or above. An example for easy math, is the rent would have to be $1,200 or above if the mortgage, property taxes and insurance (and HOA if applicable) would be $1,000 or below.
• Additional program for 2-4 units can be structured off of short term rentals with additional requirements. Minimum 700 credit score, 25% minimum down payment with 1 year short term rental history required. 30% down payment is required with no short term rental history. Minimum 1.25 DSCR based on AirDNA rentalizer. Please contact for additional details.
• Qualify on Interest Only payment which is great for cash flow. 10 year interest only payments converting to 30 years principal and interest. Fully amortized fixed interest loan.

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. There are different products available depending on the state. Please inquire. 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.

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.
• 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.

@Rich Cadena, 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.

Personal income is not needed for these loans to structure them. The only personal income that is verified is for example to show the transaction history for a down payment.

Regarding details you mentioned in your post, there are nationwide lenders that specialize in DSCR loans will do DSCR ratios down to .75% so an easy math example would be that the lender will underwrite a loan for $750 in rent for $1,000 expenses. This will require a higher down payment or less cash out if a refinance.

Generally speaking lenders that specialize in investment property / DSCR loans will go down to 1 DSCR ratio or $1,000 expenses to $1,000 in rent with favorable terms such as 20% down if a purchase or 75% if a cash out refinance.

If 1.2 DSCR ratio, you will get better terms such as $1,200 rent for $1,000 expenses for easy math. Generally banks are more conservative for lending on DSCR loans so they have stricter underwriting standards which is why they may require a 1.2 ratio to do a DSCR loan at all. Working with lenders that specialize in DSCR loans will get you better terms.

There are lenders that will do a DSCR loan with a middle mortgage credit score of 620 but the borrower will have to put more money down if a purchase or get less money out if a refinance.

There are lenders that will do DSCR loans for foreign nationals (so no U.S. credit lines).

There are 1-4 unit DSCR programs (so single family to fourplexes) and 5-8 unit programs. The 5-8 unit programs have a little bit of stricter underwriting and take a little longer to close. 1-4 unit DSCR programs typically can close in 3-4 weeks if the appraisal is scheduled and turned in and the borrower gets all paperwork back in a timely manner.

5-8 unit programs generally are 30-45 days to close. 

There are fixed 30 year fully amortized mortgage options for both. There are also programs where there's a 40 year term where there's 10 year interest only period followed by 30 year fully amortized. A borrower can qualify off of the interest only payment.

There are programs that structure the loan for an Airbnb rental for 1-4 units. From programs I've worked with, If a purchase, you would need at least one year of Airbnb experience plus having owned two investment properties for more than one year or one investment property for more than two years (in the most recent 2 years). The lender would use AirDNA and apply a 20% expenses factor so if the annual projected rent is $120,000 per year. The lender would take 20% off for expenses so we would then have $96K (100,000 *80%) and divide by 12 (months) so they would use $8,000 a month to structure the loan. The loan's new mortgage, property taxes, insurance and HOA (if applicable) would have to be at or under $8,000. The lender would require a 1.2 DSCR ratio if structuring as a short term rental loan which we have since we took a 20% expense factor. A lender will also use Airbnb, VRBO or other short term rental history for a cash out refinance if the borrower has at least one year of Airbnb rental experience in the most recent time period and take a 20% expense factor.

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 for the rate 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 is greater than 1.2 so will qualify for 1 ratio and 1.2 ratio programs.

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.

To clarify my first comment, you don't need an NMLS licensed individual to do a DSCR loan. Having someone is licensed overall to do mortgages generally with their own NMLS number is worthwhile since individually licensed mortgage loan originators have to take pre-licensing mortgage focused classes and pass a difficult mortgage focused exam that only 57% people pass on their first try (https://nmlsportal.csbs.org/csm?id=kb_article_view&syspa...). An individually licensed mortgage loan originator is a higher quality professional who's more knowledgeable which is worth it when as an investor or home buyer you want your mortgage experience for investment or residential properties to be a smooth one and not one you regret undertaking.