All Forum Posts by: Stacy Raskin

Mortgage Brokers work with lenders that offer different programs. Good mortgage brokers build relationships with established lenders that help their clients reach their goals. For example, these are not well known lenders like Rocket Mortgage but lenders that specialize in investment properties that don't advertise to consumers. 

Lenders are the companies that have the programs and the cash to lend. 

I'm a mortgage broker. You can research mortgage brokers in general on this website and other online research. I would recommend talking to someone who is licensed, experienced, knowledgeable and make sure you're comfortable and feel confident they can help you reach your investment goals. 

There are DSCR loan programs that are available starting with middle credit scores of 620 and above.

There are nationwide lenders that do investment property loans in all states. Choosing a mortgage broker that specializes in investment property lending will help you find the programs with the best rates and terms. 

 You're welcome!

Are you looking to buy and hold or fix and flip? There are different lenders that have programs that will require you to put some money in the deal but will help you to get going if you see good deals versus waiting on the sidelines. 

@Ruben Ramirez, You can get a DSCR loan without having gotten one before. There are lenders that will work with first time investors. Some will want you to have owned a property. Others will work with renters who are looking to buy their first property as an investment property.

Regarding your questions, there are investors making money in this market. I work with some of them. Requirements for a DSCR loan is a down payment and a credit score. More on that below. Regarding your question, DSCR lenders are funding millions of loans a month right now- it's not hard at all to find a DSCR lender.

There are lenders that will go down to 620 for your middle mortgage FICO credit score with more money down and lenders who will do 15% down for a single family with 720 and above with a 1.2 DSCR ratio (more on that below). For a 1 one ratio, they will do 20% down.

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.

One option is a down payment for a fix and flip loan or a DSCR loan. There are lenders that will work with investors to do fix and flips with any level of investor experience where the middle mortgage credit score as low as 660. The lenders with lend on non-owner occupied single family and multi family up to 4 units.The lenders will lend on a 80% of purchase price (so the buyer/borrower comes in with a 20% down payment) and 80-100% of construction loan amount with maximum after repair value LTV 70%. They offer up to 12 month interest only payments. The amount they will lender will depend on your experience level with flips.

You're exit plan at that point (or before the 12 months are up) is to sell the property of finance into a longer term loan if it's going to be a rental such a DSCR loan. These lenders also do 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. 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.

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

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 = $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.

There are loans that are 40 year terms that are interest only for the first 10 years and then fully amortized for a 30 year term. There are other terms as well. Investors like these types of loans because depending on their long term goals they're cash flowing more during the interest only period due to lower payments. 

@Ethan Gidcumb, would be great to discuss further to see what you're looking to do. We do DSCR and commercial lending nationwide.

Having certain types of visas will help to qualify for more programs. Generally speaking, without a visa, you will still qualify for some rental property loans. Most lenders have a $100K minimum loan amount.