All Forum Posts by: Brittany Minocchi

Hi Subhosh!

I’m about 45 mins south of Cleveland, happy to connect. 

Unfortunately not with traditional financing. You’d have to look at seller financing or nonQM for anything less, but then you’ll run into higher rates/fees and prepayment penalties 

Yes it is! As Jason said, there are programs that don't consider income or employment. The downside to going that route vs. conventional is that they have higher rates and fees since they're a bigger risk for the lender. Most require 20%+ down and a 660+ credit score. DSCR loans are popular. As long as the property is bringing in enough to cover PITI (and you meet the FICO/down payment requirements) you're good. If you exceed a 1.0 DSCR, chances are you'll be able to get a bit better of a rate. These loans also have prepayment penalties whereas traditional loans do not.

If your DTI will allow and you otherwise qualify for a conventional loan, they usually offer better rates and terms compared to a nonQM/commercial type loan. You mentioned that you do intend to occupy it, so a second home loan might be more beneficial. They used to have much better pricing, but people took advantage (doing the opposite of what you're doing - not intending to occupy the property but acting like they are to get more favorable terms) and now they aren't so different from a conventional investment loan. If you decide to go the DSCR route (a popular option for STRs), make sure your lender knows it's going to be used as a short term rental. Not all will use STR data For the appraisal. There's a chance they'd look at market rents for comparable properties that are rented on a long term basis, which could cause trouble when it comes to meeting the ratio requirements. I recommend staying with conventional loans as long as you can qualify - it'll save you $$$.

If you haven’t already, make sure to familiarize yourself with the POS inspection process and factor that into your numbers (for any properties it may be applicable to). 

@Michael Dumler no problem! Investors in my area run into that issue all the time, so it’s something that jumps out at me. 

Quote from @Michael Dumler:

@Bailey Coleman, I'm sure some lender will correct me on this, however, I believe Fannie and Freddie have a six-month seasoning period for delayed financing. If this is true, then a non-QM loan product such as a DSCR loan could be a viable option for a cash-out refi. This option will still take a couple of weeks to process allowing for proper underwriting and appraisal.

Delayed financing and a cash out refi are a bit different….delayed financing is done before 6 months and without an existing mortgage, cash out on a financed property is (well, was) 6 months seasoning. They just increased the seasoning period from 6 to 12 months conventionally. Gotta watch those minimum loan amounts as well. In this instance, a local bank or credit union is probably the best bet. Some DSCR lenders have a $75k minimum, although most are $100k. 

Hey Seth -

Up to 75% is probably more realistic, but guidelines change all the time on DSCRs. Happy to connect if you’d like, rates will depend heavily on FICO. 

Quote from @Emilio Mejia:

My credit is at a 549, from 750 a few months ago

Most DSCR lenders require at least a 620. I have one that will go down to 575 in some cases, but you're gonna feel it on the rate and LTV. With the borrower's credit being one of the few qualifying factors, DSCRs with less than a 700 are rough.

I'll third what Kristen and Jack said - $75k is the lowest any of my lenders will go on a DSCR. I'm always on the lookout for lenders that go lower, but haven't come across any yet. I'm local to the area and have had quite a few people in the same situation as you.