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Updated about 1 year ago on . Most recent reply
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Newish Investor - DSCR loan options for a house hack duplex in San Antonio
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?
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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
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DSCR Loans: How To Use Pro Strategies To Save More And Make More
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Multifamily DSCR Loans: A New High-Impact Loan Option For Real Estate Investors?
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12 Frequently Asked Questions (And Answers) About DSCR Loans
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8 More Commonly Asked Questions and Answers to DSCR Loans
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What Documents Do You Need for a DSCR Loan?
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BRRRR Loans: What Are the Options, and How Do DSCR Loans Stack Up?
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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...