New Article: DSCR Loans: How To Use Pro Strategies To Save More And Make More

[Robin Simon]

Hey everyone - please check out my new article for BiggerPockets Blog - would love any feedback, comments, questions!

DSCR Loans: How To Use Pro Strategies To Save More And Make More

In January, we published an article about DSCR loans, a product increasingly used by more and more real estate investors to scale their portfolios.

Known for easy qualification and light documentation standards (no income verification, no DTI requirements, no tax returns, etc.), sophisticated real estate investors are continuing to utilize DSCR loan options after maxing out on conventional financing options or simply finding it's not worth trading the time and hassle of a bank qualification for the slightly lower rates.

The previous article outlined the basics of how to best position yourself as a DSCR loan borrower to get the best rates and terms on your DSCR loans. Quick recap: the rates and terms are primarily driven by three main metrics:

1. Loan-To-Value (LTV) Ratio
2. Debt-Service-Coverage-Ratio (DSCR) Ratio
3. FICO/credit score

While the rate you're going to be quoted is going to be mainly driven by those three factors, there are several other pieces to the puzzle that can also change the terms offered. The savvy DSCR loan borrower will use all the options available to optimize terms, especially in volatile rate environments like today, where every little bit of rate matters in securing profitable investments!

This article will walk through the more advanced strategies real estate investors can use to minimize their rates on DSCR loans and secure the best long-term financing for their portfolios.

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[Robin Simon]

Quote from @Eliott Elias:

Does a better DSCR give you better terms?

Are there loan products for purchases under 100k?

Yes - a better DSCR will help, esp. over the 1.25x barrier with some places giving a bonus over 1.50x. The issue right now is that with rates the way they are, its extremely hard to find anything that really cash flows comfortable, whereas a couple years ago, DSCR was never really a factor because everything cash flowed.

Loan products for under $100k are definitely available, a lot of lenders will go down to $75k loan amounts and potentially even lower by allocated loan amount if bundled in a portfolio (3+ loans in one blanket loan)