All Forum Posts by: Lisa H.

Hi Lisa - to echo what alot of others have mentioned, there's even DSCR products that can go to 75% of what the PITI is, so I wouldn't listen to a lender that's telling you its not possible, just closed 3 for my clients this past month....there's still plenty of deals everywhere.

The other thing to keep in mind, is if you find a good lender, they'll even have hard money lenders that would happily do something at almost the same rates. I know I have my private investors that will do investments all the time, way less paperwork, more non conventional financing and just better options available. So like everyone mentioned, find someone you can trust but also not just stuck with the normal conventional options. Most banks like a Bank of America and big box companies can't do out of box loan programs. Hope this helps!

@Lisa H., some lenders don't feel comfortable with DSCR loans as they don't specialize in them and they don't understand really how they work. It's best to work with a friendly, honest, experienced lender who specializes in DSCR loans. Also many lenders who offer great terms for conventional don't have great DSCR programs and vice versa. It goes back to how the lender is structured and who they sell their loans to on the back end after they fund your loan.

You will have a lot more lending options if the loan amount is $100K or over as many lenders don't do under $100K loans or if they do, they will be very fee heavy for the loan amount. It's the same work to do a $50K loan compared to a $500K loan so the lender will make sure the fees are there to compensate their team including underwriters, etc. 

In case helpful more info on DSCR loans:

DSCR loans 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

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.

Gross. Sorry that happened to you! Not sure what reason there would be for a poor attitude just because you needed to switch loan types. At least he showed his true character at the beginning, I'd take that as a win. It's not up to us as loan officers to tell you what you will or won't find, it's our job to help navigate the numbers. If they work, cool, if not, on to the next. Not all lenders require a 1.00 ratio, but less than that usually has garbage terms...and there are ways to get the ratio to work outside of just looking at market rents if you're close enough. 

Anyways, if you want to chat without needing to worry about judgement and arrogance, feel free to reach out!