Down Payment Assistance included in DSCR?

[Christopher B.]

Hi,

I am putting together a multi-family deal. I am planning to have part or all of the down payment provided by a private investor, which I will pay interest to, and refinance after a few years, once I add value, and then payoff the investor in full.

My question, is assuming a bank allows a borrowed down payment (I found some that do, and some that don't), should I expect them to include the down payment in the DSCR, since it's borrowed?

This would be a commercial real estate loan.

[Albert Bui]

Originally posted by @Christopher B.:

Hi,

I am putting together a multi-family deal. I am planning to have part or all of the down payment provided by a private investor, which I will pay interest to, and refinance after a few years, once I add value, and then payoff the investor in full.

My question, is assuming a bank allows a borrowed down payment (I found some that do, and some that don't), should I expect them to include the down payment in the DSCR, since it's borrowed?

This would be a commercial real estate loan.

Yes Chris, if the borrower or DPA (down payment assistance) as you call it comes in as a lender in 2nd position behind your banks 1st lien then that debt service or mortgage payment will be factored into the DSCR.

If you structure it as a equity and you're both members/managers of a LLC then no because thats equity.

One method is debt like you mentioned and another is debt capital.

Most regional and national outfits will not allow a 2nd position upon acquisition or purchase.

In my experience its only been community banks or credit unions that have allowed 2nd position liens upon acquisition.