Searching for 80% to 85% DCSR Lenders

[Jace Perry]

Hello, I have a house that I am looking to get a refinanced DCSR loan on at 85 to 80%. Please message me or comment below if you provide that type of product or know of someone. Thank you! 

[Zach Edelman]

Jace - I'd suggest looking at BP's list of recommended DSCR lenders. They should be able to assist you with this. Most DSCR lenders I will note can go up to 80% LTV on rate-term refinances. 85% LTV is a lot more of a rarity.

[Bobby Feinman]

@Jace Perry

Good morning Jace. As Zach said in his post, 80% is the max LTV on a rate and term refi. That is also the case on a DSCR purchase until recently. I am now able to offer 85% LTV on a purchase only.

In terms of a cash out refinance, the industry standard is a max of 75% LTV. I have a program that will go to 80% on a cash out depending on the state the property is in.

Hope this helps

Bobby

[Brandon Croucier]

What is your value & what is your payoff?
80 LTV should be doable as long as it's debt servicing.

[Derek Brickley]

Is this rate/term or cash out?  Largely depends on the full situation and value, but feel free to reach out if it would be helpful to look at some options. 

[Erik Estrada]

Quote from @Jace Perry:

Hello, I have a house that I am looking to get a refinanced DCSR loan on at 85 to 80%. Please message me or comment below if you provide that type of product or know of someone. Thank you! 

80% LTV is possible on both a cash out and rate and term.

85% LTV, I have seen only available for purchase loans at a high interest rate.

[Stacy Raskin]

There are 80% LTV cash out refinance options and 85% LTV for a single family rental purchase if the property is cash flowing (DSCR ratio of 1) and the credit score is high enough. The rate goes up by about 1% when there's a jump from 75% to 80% LTV for cash out and 80% to 85% for a purchase.

More on DSCR loans: DSCR loans won't use your income to underwrite the loan.

DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.

Here's a bit more in detail about how rates are calculated for DSCR loans:

1. Credit score- the higher the best. 760-780+ generally gets best pricing for investment property loans with most lenders. From there every 20 point increment affect pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then going down to 740-759 and so on.

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.

4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.

I've included an example below to help illustrate this.

So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

See example below:

DSCR < 1

Principal + Interest = $1,700

Taxes = $350, Insurance = $100, Association Dues = $50

Total PITIA = $2200

Rent = $2000

DSCR = Rent/PITIA = 2000/2200 = 0.91

Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

DSCR >1

Principal + Interest = $1,500

Taxes = $250, Insurance = $100, Association Dues = $25

Total PITIA = $1875 Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

If a purchase, you also generally need reserves / savings to show you have 3-6 month payments of PITIA (principal / interest (mortgage payment), property taxes and insurance and HOA (if applicable). If a cash out refinance, many lenders will allow the cash out to satisfy the reserves requirement.

DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.

Happy to connect to discuss further. 

[Carole Parker]

Hi Jace! I'd like to collaborate with you on this. I sent you a connect request, let's talk! 

Looking forward to hearing from you.

[Connor Hibbs]

Hi Jace,

I can help you with finding 80% on a cash-out and will shoot you a message. It is worth noting that the rates do jump up a bit once you go from the more standard 75% to the 80%, so we'll want to make sure that the property's cash flow supports the 80% loan size.

[Carlos Valencia]

Hello Jace, 

We work with some lenders that can go up to 80% LTV for rate and term refi. It wont be cheap though. This will cost you about 1-2 points depending on your scenario. Your looking at a rate around high 8s to low 9s possibly. We would need to review your scenario more in depth to see what is the best option for an 80% rate and term using DSCR.

@Albert Bui @Matthew Kwan