All Forum Posts by: Stacy Raskin

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.

There are some lenders that do both fix and flip financing and also DSCR loans. In that case, no seasoning or waiting to refinance to the long term loan such as a DSCR loan. If different lenders, many will require a 6 month seasoning period from when you purchased the property to rehab.

I'm a mortgage broker that does residential and investment property loans in Florida- happy to connect. 

You're better off using a mortgage broker. They will shop your loan to different wholesale lenders to get you the best loan program. That you aren't stuck with one lender's programs and rates. 

If it's a single family home for investment, there are programs that have 15% down with a middle credit score of at 720 and above. It has to have a DSCR ratio of at least 1.2. Which means, (for the sake of simple math), the rent would have to be at least $1,200 and the mortgage, property insurance, taxes (and HOA if applicable) would need to be $1,000 or less.

There are 20% down programs for middle credit scores of 680 or above with a DSCR 1 ratio which means if the monthly rent is $1,000, the expenses have to be $1,000 or less.

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 = $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 loans can be used for purchases, rate and term refinances (to lower your interest rate) and for cash out refinances. Most lenders allow you to vest individually or as an LLC.

Are the other two vacant units cosmetic remodels or full gut jobs- are they currently habitable?

Also, is the retail building currently rented? 

Depending on that, a bridge loan would be helpful or potentially a longer term refi product depending on the condition of the units and current rents. 

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.

 Right, that's why I said "some lenders." Different lenders have different criteria. Most use 100% of the 1007 appraisal market rent survey and for AirDNA, there's usually an expense factor taken. 

There are lenders that will use AirDNA to underwrite a loan for a purchase. The terms vary based on the lender They will use 80% of the projected AirDNA rents for a purchase if SFR or 75% for 2-4 units. For a refinance, they will want a 12 month STR history.

For a purchase, there are lenders that will lend with 20% down for a single family rental SFR or 25% for 2-4 units.

Rates are currently in the 8s to 9s for these types of products. 

Working with a mortgage broker will help you as your situation will be shopped to different lenders to get you the best rate and terms. 

@Joe Beutler, No, there are lenders that either use a STR rental comp survey or they will use AirDNA and use the annual revenue if a purchase and take a 20% expense factor. They will not use a long term rent schedule. So if for easy math, the projected annual revenue is $120K on AirDNA, they will use $96K (80% of it) and divide by 12 months for the rent that the the expenses have to be at or under to meet a DSCR calculation of 1. So in this example, the expenses would have to be at $8K or under (96K/12(months)).

Is this a house and what kind of loan product is it- an ARM or 30 years?

There are lenders that do 30 year fixed with 20-25% down for STR with borrowers with previous STR rental experience (20% down for a SFR or 25% down with 2-4 units). If no STR rental experience, looking at more like 70% LTV. Some additional underwriting details regarding the AirDNA grade depending on the lender but those are the LTV details.

Rates depend on when you lock the loan and they've increased a bit from a month ago when I assume you locked the loan. 

I work with lenders that do those terms-happy to connect. 

@Jordi Valado, I work with lenders that will work with investors 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 100% of construction loan amount with maximum after repair value LTV 70%. They offer up to 12 month interest only payments.

Your 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.

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.