Does a DSCR loan affect your personal credit and DTI ratio?

[Charles Schmidt]

I have been shopping around for lenders for a 20% down DSCR loan for a new short term rental property. One of them told me that if I close the loan directly into an LLC (which he confirmed they can do), then it won't affect my personal DTI ratio when I'm looking to qualify for future loans, specifically my next primary/house hack that I plan to buy at the end of next summer.

I mentioned this to another lender and he said this is not the case since it will be my LLC and is therefore still tied to my personal credit.

I plan to reconnect with both of them for clarification but wanted to see if anyone on here had experience with a similar situation.

Thanks!

[John Morelli]

When using DSCR financing, even when vesting and borrowing through an LLC or other special purpose entity, you will be required to personally guaranty the loan. As a result of the PG, generally all lenders will consider this in your DTI (global debt service on commercial loans).

However, as long as your real estate investments are covering debt service at 1.25x or greater, it will wash out the DTI impact in residential lending and blend out in your global cash flow / debt service for any bank or commercial lender.

Let me know if I can be of further assistance.