Seeking Lender for 80-85% Cash Out Refi DSCR Loan

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Seeking Lender for 80-85% Cash Out Refi DSCR Loan

Miranda Yanez
Investor · St. Louis · Member since 2023 · 10 posts · 5 votes

Hello,

I have an ongoing flip project that we have recently decided to hold as a long-term rental. I am now looking to connect with DSCR lenders that offer a 80-85% cash out refi. If you've got lending options that meet this criteria, please let me know!

Thank you!

Miranda

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Raymond J. RodriguesBusiness Member
Lender · Miami, FL · Member since 2017 · 1k+ posts · 797 votes
2y

@Miranda Yanez, 85% is a unicorn that simply does not exist. Max you'll find is 80% with any lender. 

[email protected]619-456-8311
Helm Mortgage Corp.5127 Reviews
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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2y
    Quote from @Miranda Yanez:

    Hello,

    I have an ongoing flip project that we have recently decided to hold as a long-term rental. I am now looking to connect with DSCR lenders that offer a 80-85% cash out refi. If you've got lending options that meet this criteria, please let me know!

    Thank you!

    Miranda


     Hey Miranda, 

    Is the property listed? When was the purchase date? You may go up to 80% LTV on a DSCR loan as long as the property can debt service

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
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  • Doug SmithPro Member
    Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
    2y

    You'll have an LTV hit for Cash-Out, so you'll likely max at 80%. The trick is going to be getting the DCRR ( Appraisal 1007 Income / (PITI + HOA)) at or above a 1.0X. It's all going to boil down to cash flow.

    0Reply
  • Jonathan Taylor
    Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes
    2y

    @Miranda Yanez I have a lender that goes up to 80% LTV as long as the property debt covers. I own in Saint louis and the cash flow in that market is a good option for max leverage. I Dm'd you since I know that market well.

    0Reply
  • Bobby FeinmanBusiness Member
    Lender · VA Beach, VA · Member since 2019 · 920 posts · 91 votes
    2y

    @Miranda Yanez

    Miranda

    We will go to 80% cash out depending on where the property is located. What is the address of the property?

    Bobby

    [email protected]757-222-5937
    0Reply
  • Justin Sanislo
    Member since 2024 · 3 posts · 1 vote
    2y

    Good luck, I've been calling around all day. The absolute best I can find is 80% with DSCR 1.2 or better, assuming 4 units or less.

    I'm looking for 6 units trying to get 75% and the best I can get it 70% so far......

    1Reply
  • Stacy RaskinBusiness Member
    Lender · Member since 2022 · 1k+ posts · 505 votes
    2y

    There are lenders who will do 80% cash out on the new appraised value if you have owned it for more than 3 months and you are using an LLC. It will require a 1.1 DSCR ratio and if it's a single family residence and your FICO score is 700 or above.

    There is a lender that will do 1-4 units with a DSCR ratio 1.25 if 740 and above credit score. Don't need an LLC. It can be a shorter term if you don't want to use the new appraised value (purchase plus invoiced improvements). If you want to use the new appraised value then it would be a year out from when you bought it. These guidelines get updates all the time. Lending options vary by state but both are available in Missouri. It becomes harder to reach a DSCR of 1 and above which will be necessary as higher LTV increases the rate. Generally lenders will take the lower of the appraiser market rent survey and the actual rents.

    5-8 units have more restrictive guidelines. 

    More on DSCR loans- they 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+ generally gets best pricing for investment property loans with most lenders

    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

    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. 

    [email protected]818-770-0340
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  • Raymond J. RodriguesBusiness Member
    Lender · Miami, FL · Member since 2017 · 1k+ posts · 797 votes
    2y

    @Miranda Yanez, 85% is a unicorn that simply does not exist. Max you'll find is 80% with any lender. 

    [email protected]619-456-8311
    Helm Mortgage Corp.5127 Reviews
    WebsiteView Page
    2Reply
  • Robin SimonBusiness Member
    Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
    2y
    Quote from @Raymond J. Rodrigues:

    @Miranda Yanez, 85% is a unicorn that simply does not exist. Max you'll find is 80% with any lender. 


    Yes - maybe very rare 80% Cash Out options (even if a lender has it available, probably doesn't actually meet the DSCR qualification requirements). 85% cash-out non-existent for DSCR Loans

    [email protected]
    Harpoon Capital514 Reviews
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  • Brittany MinocchiBusiness Member
    Lender · Massillon, OH · Member since 2022 · 1k+ posts · 486 votes
    2y
    Quote from @Justin Sanislo:

    Good luck, I've been calling around all day. The absolute best I can find is 80% with DSCR 1.2 or better, assuming 4 units or less.

    I'm looking for 6 units trying to get 75% and the best I can get it 70% so far......


     5+ units takes you from residential to commercial, so the terms will be a bit different....depending on the scenario and your borrower profile, you may be able to get to 75% on a 6 unit. I quoted it for a borrower on an 8-unit a couple of weeks ago. Maxing out at 70% is pretty common with a lot of commercial lenders. 

    [email protected]330-354-6590
    Brittany Minocchi - Barrett Financial Group, LLC522 Reviews
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  • Brittany MinocchiBusiness Member
    Lender · Massillon, OH · Member since 2022 · 1k+ posts · 486 votes
    2y

    Hey Miranda - 

    I've never seen 85% LTV on a DSCR cash out, but 80% is doable in some instances. Depends on your level of experience, FICO, location, loan amount, etc. Expect to see a jump in rate from 75% to 80%. Happy to connect if you'd like to reach out!

    [email protected]330-354-6590
    Brittany Minocchi - Barrett Financial Group, LLC522 Reviews
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  • Justin Sanislo
    Member since 2024 · 3 posts · 1 vote
    2y



    Quote from @Brittany Minocchi:
    Quote from @Justin Sanislo:

    Good luck, I've been calling around all day. The absolute best I can find is 80% with DSCR 1.2 or better, assuming 4 units or less.

    I'm looking for 6 units trying to get 75% and the best I can get it 70% so far......


     5+ units takes you from residential to commercial, so the terms will be a bit different....depending on the scenario and your borrower profile, you may be able to get to 75% on a 6 unit. I quoted it for a borrower on an 8-unit a couple of weeks ago. Maxing out at 70% is pretty common with a lot of commercial lenders. 

    The problem is the loan amount is too low for many people. Lowest I’ve found was a loan amount of $250k and several lenders are wanting $400k as the lowest loan amount.  

    0Reply
  • Brittany MinocchiBusiness Member
    Lender · Massillon, OH · Member since 2022 · 1k+ posts · 486 votes
    2y
    [email protected]330-354-6590
    Brittany Minocchi - Barrett Financial Group, LLC522 Reviews
    View Page
    0Reply
  • Brittany MinocchiBusiness Member
    Lender · Massillon, OH · Member since 2022 · 1k+ posts · 486 votes
    2y
    Quote from @Justin Sanislo:



    Quote from @Brittany Minocchi:
    Quote from @Justin Sanislo:

    Good luck, I've been calling around all day. The absolute best I can find is 80% with DSCR 1.2 or better, assuming 4 units or less.

    I'm looking for 6 units trying to get 75% and the best I can get it 70% so far......


     5+ units takes you from residential to commercial, so the terms will be a bit different....depending on the scenario and your borrower profile, you may be able to get to 75% on a 6 unit. I quoted it for a borrower on an 8-unit a couple of weeks ago. Maxing out at 70% is pretty common with a lot of commercial lenders. 

    The problem is the loan amount is too low for many people. Lowest I’ve found was a loan amount of $250k and several lenders are wanting $400k as the lowest loan amount.  


    Yep, $400k is standard and a few will go down to $250k. I've had to turn a ton of people away because their loan amounts were too low, so I decided to do some digging and FINALLY found one that'll go below $250k.

    [email protected]330-354-6590
    Brittany Minocchi - Barrett Financial Group, LLC522 Reviews
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    0Reply
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