DSCR loan questions

[Chris K.]

If someone were looking to do a DSCR loan to purchase investment STR property:

What advise can be given from getting a DSCR loan and differences between conventional and DSCR loan?

If your potentially property will gross around 30-35k annually , loan amount of 250k would this qualify?

Expenses would be around 800 monthly pre loan payments…

[Stephanie P.]

Originally posted by @Chris K.:

If someone were looking to do a DSCR loan to purchase investment STR property:

What advise can be given from getting a DSCR loan and differences between conventional and DSCR loan?

If your potentially property will gross around 30-35k annually , loan amount of 250k would this qualify?

Expenses would be around 800 monthly pre loan payments…

If you have a good broker to guide you, DSCR loans are easy and the ltv's are expanding.

Minimum loan amounts are around 75K.  Some companies go lower, but most don't.  The lower the loan amount, the higher the points.

Rates vary per lender, but go anywhere from 3.99% to 8% depending on the deal. All have a prepay of 3-5 years.  Most can be bought down to 1 year, but some do not allow that.

In Florida, you will need an entity like an LLC. Most don't require income verification meaning no tax returns, paystubs or p and l are required.

As an example, a guarantor with a 760+ middle score, who is looking for a 250K loan amount on a single family property at 75% ltv, cash out, will get a rate of 4.5 to 4.75% depending on the length of the prepay.  That loan would generally cost 2 points, an underwriting fee of $1645, an admin fee of $76 to set up the escrow account, an entity review fee of $595 and a $450 processing fee.  Fees vary per broker/lender and documentation level; for example if you don't have 6 months reserves that would be required for the lender above, there are lenders that would allow for that and charge 6.74% with a $1995 underwriting fee, but no entity review fee or admin charge. They will charge a $600 closing doc fee though.  Most everything is done on a 30 year fixed up to 8 units.  Another lender who has lower fees (like an underwriting fee that's half of the first lender) charges an origination point so they're a wash.  They're all a little different.

Find a good DSCR broker and they can guide you through the myriad products. It's like Plinko on the Price Is Right. You go through the interview process and after answering a bunch of questions specific to your scenario, the broker will know where to send your loan.

Hope that helps.

Stephanie