Buying student housing using DSCR loan

[Bradley Rieger]

Are you able to qualify for a DSCR loan when buying student housing in a college town. You can get more rent from students than if you rented the house as a single family. Will the DSCR lender look at the student housing comps or will they use the single family as there rent comps.

[Phil Moore]

It's my understanding about DSCR loans that they use prevailing market rental rates to determine the debt service coverage ratio. You may, therefore, have a problem securing the loan if you are relying on the higher student rental rates to secure the loan. You could circumvent this particular issue by having the property appraise at a high enough price to justify the loan. Most DSCR products you will find are about 80% LTV.

Once you secure the loan, how you run the property is of less importance so long as it meets the underwriting criteria for the respective lender.