Debt Service Coverage Ratio Loans

[Caleb Smith]

On the last step of the BRRRR process, I am wanting to use a loan to refinance the property and pay back the hard money lender.

However, the lender I spoke with said it would be hard for me to qualify based on my past 2 tax returns.

Isn't the DSCR loan based on the projected rent and debt service, not personal tax returns and income?

Any help on this would be greatly appreciated.

[Rob Beeman]

@Caleb Smith Caleb, as mentioned in other posts here, when the loan is supplied to an entity (LLC), commonly called a DSCR loan, the income underwriting that is used is the lease of the property. The income from the property must cover its bills, PLUS earn positive cash flow.

As for LTV, typically the LTV is driven by the additional guarantor's (you) FICO scoring. The rate is typically driven by the LTV. The better the FICO, the higher the LTV options. The higher the LTV chosen, the higher the rate. Hope that helps, Rob.