Full DSCR Loan Process

[Orion Sorrell]

Hello everyone! I had a quick question on the DSCR loan process. My mom and I want to get our very first rental property and want to use a DSCR loan. I am wondering what the full process for getting the loan is? Would I need to find the property we want first then send it to the lender? We are just looking for clarity on the whole DSCR loan process, thank you so much!

[Stephanie P.]

Quote from @Orion Sorrell:

Hello everyone! I had a quick question on the DSCR loan process. My mom and I want to get our very first rental property and want to use a DSCR loan. I am wondering what the full process for getting the loan is? Would I need to find the property we want first then send it to the lender? We are just looking for clarity on the whole DSCR loan process, thank you so much!

 Okay.  Strap in. 

You should find a broker that specializes in DSCR lending. Once you find that broker, let them help you figure out how much you can afford. They'll ask for a loan application, 2 month's bank statements and they should pull credit. You'll more than likely have to pay for a credit report. Each borrower should cost around $30. They'll need your bank statements to see how much cash you're working with. ON DSCR loans, there are some brokers that allow you to put as little as 15% down. Most are at 20% and the best rates are 25% down and below. Just because it's a low down payment doesn't mean it's the best loan. Get a preapproval letter.

 Now that you know what you qualify for, it's time to see what properties are available and what they qualify for.  If a property is really expensive, the rents may not cover the mortgage and the loan won't work.  It's here that a good Realtor earns their money.  They may be able to find you a property that brings in good rents and is affordable.

Once you find the property, get it under contract. The contract gets signed and then the fun begins. The contract gets sent to the broker along with your preferred title company's contact info, hazard insurance contact info, a copy of your earnest money deposit (wire receipt and the corresponding bank statement or transcript), any LLC docs if you're using one, and a copy of your driver's license.

Once the appraisal comes in, you'll tighten up any loose ends and close.

No fuss, no muss.  It usually takes between 21-45 days depending on how busy the appraiser is.

Your takeaway from all of this is:

Pay no upfront application fees or origination fees. The ONLY money out of pocket should be for credit report(s), appraisal and then earnest money deposit (EMD).

The process should not be like a Chinese fire drill.  A good broker should be able to lay it out like I just did.

The property should not require any renovation.  That would be a different type loan.  

Hope this helps.

Stephanie