Seeking DSCR Loan Advice

[Brad Kelly]

Hi everyone, I am seeking a DSCR loan on a single-family rental home in Birmingham Alabama. I am new to mortages, loans in general so any advice GREATLY appreciated.  No idea what rates are fair or if I can borrow from a bank or need to do via a private lender. 

Details:

Single Family Home, Birmingham Alabama 

Purchase Price:  $268,000, planned to 30% for down payment 

I also then will have showable funds for 24 months of payments in the bank.

Credit score roughly 790

Property Intended Use: Long Term Rentals, general investment

Turn Downs So Far:  

A major reason I have been turned down so far is I do not currently rent a primary residence. I live in a home my parents own rent-free.

I also had one deal fall apart because I couldn't get the contract extended for a loan but this new seller is flexible.  That loan was 6.6%  which I also thought was high and why I haven't returned there yet although will if it is my best option. 

[Nick Belsky]

@Brad Kelly

Not having a rent or mortgage history will be a challenge to get you qualified for a conventional mortgage for sure.  The good news is that there are many private lenders who don't care.  Lol.

Here's a rough idea of what terms could look like for you (assuming your DSCR is 1.00+)

30 year fixed rate, fully amortized, no balloons

70LTV Purchase on a SFR in Birmingham, AL (not rural)

5.625% Interest Rate (Buy Down available to 4.75%)

No Origination Points from Lender

No Buy Down Points (2 max available in this scenario)

5 Year Pre-Payment Penalty (add 0.375% if you want a 3 year PPP)

Broker Fees are usually 1-3%

Underwriting/Attorney fees are usually between $1000-1600

Title and Pre-Paids and such vary.

On a side note, I have lenders who could also do 80LTV on this for 5.75% at par rate (no points).

This is by no means best pricing out there, but it should be ballpark of what could be available to you in the market right now.  Obviously, these can change based on your actual qualifications, credit history, property appraisal report, etc... all subject to change (had to get my disclaimers in there).

Happy Hunting!

Cheers!