DSCR Close as individual

[Nandish Desai]

My wife and I bought our first condo in our own names. We recently sold that condo to 1031 exchange. We had bought the condo with a conventional mortgage in our individual names. For 1031 exchange, we can't close the new property in a LLC due to tax purposes. Are there lenders that do DSCR but close in individual names? Confused because DSCR by nature looks at the income the property is generating and not your personal income or credit I believe.

[Jeffrey Blais]

Yes, you can close in the individuals name with DSCR. Please let us know if you need any assistance with this as we're a local mortgage brokerage located in Fall River MA. (Troy City Mortgage)

-All The Best, Jeffrey Blais

[Erik Estrada]

Quote from @Nandish Desai:

My wife and I bought our first condo in our own names. We recently sold that condo to 1031 exchange. We had bought the condo with a conventional mortgage in our individual names. For 1031 exchange, we can't close the new property in a LLC due to tax purposes. Are there lenders that do DSCR but close in individual names? Confused because DSCR by nature looks at the income the property is generating and not your personal income or credit I believe.

It will depend on the state, but yes you can close on a DSCR loan in your individual name. DSCR lenders will still look at your personal credit, reserves, background, and experience. It is not entirely property dependent.

[Devin Peterson]

Quote from @Nandish Desai:

My wife and I bought our first condo in our own names. We recently sold that condo to 1031 exchange. We had bought the condo with a conventional mortgage in our individual names. For 1031 exchange, we can't close the new property in a LLC due to tax purposes. Are there lenders that do DSCR but close in individual names? Confused because DSCR by nature looks at the income the property is generating and not your personal income or credit I believe.

Hi Nandish,

Some DSCR lenders mandate it some don’t, depends who you work with. Happy to connect and educate more on the nuances DSCR financing. Local to you in Mass as well! Let’s connect. 

[Brittany Minocchi]

Hey @Nandish Desai!

Congrats on the sale of your condo. Yes, you can absolutely close a DSCR loan in your personal name. Some lenders won't allow it, but there are lenders that do. it is a business purpose loan - you'll need to sign a form stating that you won't be occupying the property and your rate may be slightly higher than if you were to close in an LLC. DSCR loans DO look at your personal credit, as most of them still require a personal guarantee even if closing in an LLC. To qualify, the income from the property will need to be equal to or greater than the monthly principal, interest, taxes, insurance and HOA (where applicable). Your personal income, employment history and DTI is not relevant with this loan type.

Feel free to reach out if you have any questions, happy to connect! 

[Robin Simon]

Quote from @Nandish Desai:

My wife and I bought our first condo in our own names. We recently sold that condo to 1031 exchange. We had bought the condo with a conventional mortgage in our individual names. For 1031 exchange, we can't close the new property in a LLC due to tax purposes. Are there lenders that do DSCR but close in individual names? Confused because DSCR by nature looks at the income the property is generating and not your personal income or credit I believe.

 Like other posters have mentioned - it will likely vary by lender - but generally most states will be OK with either Individual or LLC but there are a handful of states that due to various regulatory interpretations will require a LLC (or require a LLC to have prepayment penalties on the loan structure)

Borrower = Individual or Entity		AL, AK, AR, AZ, CA, CO, CT, DE, DC, HI, ID, IL, IN, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, NE, NH, NJ, NM, NY, NC, OH, OK, OR, PA, SC, SD, TN, TX, UT, VT, WA, WV, WI, WY
Borrower = Entity only		GA, FL, IA, MT, RI, VA

(1-4 Units) Prepayment Allowed Vested Entities Only

IL, NJ