Newish Investor - DSCR loan options for a house hack duplex in San Antonio

[Rebecca B.]

I'm a newish investor, bought a duplex in San Antonio, TX to house hack last year. Major unexpected repairs meant we only had enough money to fix one unit in 2023, but I anticipate finishing renovations on the second unit by Summer 2024. These are the details:

• * Approx. ARV: $225,000
• * Loan balance: $135,000
• * Current mortgage rate: 7.65% APR
• * Monthly mortgage (PITI): $1520
• * Rents :
  • - 1 unit - $1500 (midterm rental)
  • - 1 unit - $800 (long term rental - anticipated rent)
• *Approx. FICO score: 690-700 (no negative marks but my DTI is kind of high at 30% usage)

The deal is not great, but please be kind. I'm doing my best to make it work. I want to refinance into a DSCR loan when renovation is complete. I've never used this type of loan product before but I'd really like to refinance into a DSCR loan. Are rates low enough for this deal to make sense? What kind of points, closing costs, and rates can I expect? Any resources where I can learn more about this type of loan?

[Robin Simon]

Hi - assuming you are done with the "house hacking" parts (i.e. not living in the property and can document that) - this could certainly work for a DSCR Loan. Rates have come down a bit and can work in certain situations - but this one looks like it potentially has the factors to make DSCR work in this environment (lower on the value range, multi-unit, creative leasing strategies i.e. MTR).

Rates and Fees can vary - probably looking now (but things can change fast by summer) of rates in the 6.5-8.5% range and closing fees anything from 0 points to a heavy buydown (3-4 points) for flexible lenders.

As for resources, check out this 10-part article series on DSCR Loans published here on BP last year, should cover everything you need to know!

DSCR Loans: What Are They And How To Get The Best Terms

https://www.biggerpockets.com/...

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

https://www.biggerpockets.com/...

Multifamily DSCR Loans: A New High-Impact Loan Option For Real Estate Investors?

https://www.biggerpockets.com/...

12 Frequently Asked Questions (And Answers) About DSCR Loans

https://www.biggerpockets.com/...

8 More Commonly Asked Questions and Answers to DSCR Loans

https://www.biggerpockets.com/blog/eight-questions-and-answe...

What Documents Do You Need for a DSCR Loan?

https://www.biggerpockets.com/blog/what-documents-do-you-nee...

BRRRR Loans: What Are the Options, and How Do DSCR Loans Stack Up?

https://www.biggerpockets.com/blog/brrrr-loans-what-are-the-...

Short-Term Rental Loans: What Are the Options and How Do DSCR Loans Stack Up?

https://www.biggerpockets.com/blog/short-term-rental-loans-a...

DSCR Loans: Terms to Know When Working With These Popular Rental Loan

https://www.biggerpockets.com/blog/dscr-loans-terms-to-know

What’s Next For DSCR Loans? Updates For 2024 and Beyond

https://www.biggerpockets.com/blog/what-is-coming-in-2024-fo...