DSCR Loans: The Greatest Investor Loan of All Time?
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- Опубліковано 22 лип 2024
- Can't qualify for a home loan? Get a DSCR loan! Maxed out on conventional loans? Get a DSCR loan! Want to grow your real estate portfolio faster than ever before? Get a DSCR loan! These investor loans may sound like the holy grail of mortgages, but this is NOT always the case, and if you don't know what you're doing with debt service coverage ratio loans (DSCR), you could face severe consequences.
On this Mortgage Monday, Christian and David review one of the most-hyped, commonly used, and easily misunderstood home loans-the DSCR loan. Most investors think this mortgage allows them to buy UNLIMITED properties without any income to qualify themselves. This is not only incorrect, it's outright dangerous and could lead to getting a higher mortgage rate, worse terms, and significant penalties if you're not SURE that this is the loan for you.
However, for those ready to take their portfolio to the next level and commit themselves to buying steals, not just deals, the DSCR loan could be THE thing that takes your real estate portfolio into the MILLIONS.
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Check Out Another Mortgage Monday Video:
• Mortgage Monday
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DSCR Loans: What Are They And How To Get The Best Terms:
www.biggerpockets.com/blog/ds...
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What Documents Do You Need for a DSCR Loan?
www.biggerpockets.com/blog/wh...
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8 More Commonly Asked Questions and Answers to DSCR Loans:
www.biggerpockets.com/blog/ei...
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00:00 The One Loan to Lend Them All
01:26 What Are DSCR Loans?
03:12 Terms and Penalties
07:30 Mortgage Rates
07:55 Why DSCR Differs A LOT
12:37 DON'T Go Direct
14:57 Connect with Christian and David!
I did two loans. Cash flow is crazy. 800 plus 1500 on two properties plus I pull 247k.
What state?
Thank you for explaining this! I’ve been needing another route to keep adding real estate properties while my DTI is maxed out.
Super great information! Thanks David & Christian.
Great video, DSCR loans are one of the most useful tools for investors that either want to have large portfolios of properties or investors that cant qualify for a conventional loan on an investment property due to their income or debts!
Wonderful! I'm new to RE investing. Retired with limited income, so this answers the debt to income question. Thank you.
You really only need a DSCR loan as an exit strategy from a hard money loan as RE investor. Say you are fix and hold for rental, your income will come from the property.😊
@@itsmebedazzle You could also use it as an acquisition loan to acquire property and even keep as a 30 year fixed product.
@@cjthelender1 I know. I'm a hard-money lender.
I will be looking into this product on future deals. Great info. Thank you!
You guys make me look forward to Monday! Thank you!
Just the info I was looking for. Tks guys.
loved this! I was wondering DSCR loans
Great information, thanks Christian and David
Excellent information, thanks!
Very thorough and dense: incredible info on the DSCR!!
DSCR loans seem pretty cool! It's like finding the right tool for the job. But it's important to remember that not all loans fit every situation. Always talk to a loan officer to see if it's the right fit for you. Don't be afraid to ask questions and get the best advice for your specific needs. 😊
Great information
Dscr is literally the only loan I can do that will allow a 3 month seasoning period as opposed to 6-12. That’s 4 brrrr a year rather than 2 or 1.
But what about the prepayment penalty? Assuming your numbers always workout with that included
How has that affected your debt to income ratio?
What company do you use for the loan?
Great video!!
If I wanted to build a duplex, what loan would you recommend?
GREAT video!
Great information and helped clarify what is included in the DSCR calculation.Howeve, I think at 7:05 that the mortgage backed securities are considered bonds rather than stocks.
Awesome beard Dave!
Everytime I see Dave with a beard I think 🤔 the wrestler the big show is doing real estate now 😅
Great episode ! Thank you!
I’ve gotten a couple of these DSCR loans.
First off the loan options and terms is lender specific. 100% lender specific. You can get 15 year. 20 year. 30 year. A interest only for 5 7 10. The options are crazy. Each lender can make their own guidelines. 640 credit 620 680. Reserves were 6 months 3 months. Seen both. I’ve seen so many variations. You guys kinda made it sound like this is all that’s available.
I have not found a lender that will go lower than 20% down or lower than a 620 credit score. None required tax returns. All pulled your credit.
And here we sit without 20% down, a 620 score...and zero properties.
@@butchgreene Who was the lender?
This guy Christian at one broker just did the loan for Mr Green for 15% down
@@butchgreenewhat is the hang up ??
Will this work on properties with 10+ yr modified mortgage loans?
My clients love DSCR loans. In Missouri
Do expenses include HOA fees or just PITI? I have a property that would be 1.13 ratio without the HOA fees but only 0.9 ratio if HOA fees count
Thank you 😊
I have several sf rentals in Akron Ohio. Five of them already have dscr 30-year loans serviced by a lender out of Texas. This lender does not have a minimum property value rule. Which is great because Akron properties do not appreciate much, although they have high rent. This lender has temporarily pulled out of Ohio for an undetermined amount of time. So I am looking for a new lender that deals with low value properties. Any ideas? I still have several properties that are owned free and clear. I would like to refi them so that I will have cash to buy more.
Care to list the name of the company out of Texas?
I own one rental property that's a duplex that generates 5700 a month my mortgage is 1940 with 3500 positive cash flow after maintenance. Can I purchase another property with DSCR? I purchased the property for 499k and put down 250k. I have a balance of 240k.
Good Stuff!!
I’m a builder and real estate investor would love one of these for a triplex or quadplex
Not a problem.
Beautifully explained… I’m looking to get DSCR loans asap. I’m maxed out on number of conventional mortgages. Do you lend in NC?
Yup, it's a great route for you.
Will they allow this for Airbnb Arbitrage model if you want to use a loan to help you buy furniture?
You could if you already have the property, have equity in it, and use a DSCR loan as a cashout refi.
Can you use this dscr loan initially and transfer into a conventional or fha loan
Yes. Conventional for sure.
I have an apartment complex that I want to buy in Houston. How can I get with you guys?
So in other words if you have great credit, and great debt to income ratio it's best to go conventional loan. This is more for those who do not want to furnish income and credit score.
I disagree. All my properties are in LLCs and I want to close at time of closing in my LLC so my name is not on the deed and quit claim. DSCR allows that conv doesn't. Also a lot of times lenders have over lays, and using dscr you can remove the loans out of your debt ratio for primary. Also dscr doesn't have a jumbo limit like conventional. A lot of benefits to go dscr which is why you see a lot of investors with great credit, and great income go dscr vs conv. Seller concessions are 3xs more on dscr then conv too.
Great info. Are there pre-approvals for DSCR? How do you use this product in a market where homes are only on the market for a day or two?
Yes, you can get pre-approved for a DSCR. Just put in an offer within that day or two.
Prepayment penalties are designed to keep you in debt and keep interest payments flowing to the bank.
In some cases you could actually pay a point at closing to get rid of the prepayment penalty.
Exactly government is its own business.
Nobody keeps me anywhere 😂
As a CRE underwriter for a regulated bank, I would caution finding private lenders. There are so many bad actors due to the objectivity of DCR loans and can have very hairy terms.
Cant a decent attorney and a good broker prevent that well enough? I had assumed so...
Great video!
Is it okay if some of downpayment or reserves are money borrowed from personal loan?
Yes. You can do that.
Yes.
The think is where to apply with who. Mosto of the lender I know are not trustable.
When ya gona talk about all in one loan
How much liquid do you need in reserves to be approved?
6 months and you can’t touch it
Some lenders do not require reserves.
Can you use a DSCR loan for a ADU build?
To build the ADU, no. To use on a property that has an existing ADU, yes.
Does this broker also coordinate private money?
Some brokers do, some don't
Can you refinance into a DSCR loan from a Owner Financed property or is it for new purchases only?
I’ve never tried that but I wouldn’t see why that would not work given enough seasoning and using a servicing company.
DSCR underwriter here. We can do a refinance as long as you own/occupy another primary. We look out for occupancy red flags though. If it appears that you occupy the subject property, we'll deny or counter to an income-based program.
@@brennenmoloney4736 why's that?? What if it was a owner occupied 4-plex??
Yes, you can.
So if I’m getting a dscr loan how much down do I need? And let’s say if I’m doing a flip but I want to keep the house and use a dscr loan. Can I refinance into a dscr loan?
Yes you can. We have a combo of loans to do this-hard money to buy and rehab then refi into DSCR. The BRRRR special.
@@DavidGreene24 ok. What if I wanted to get a fourplex that already was rehabbed and wanted to get a DSCR loan. Is it 20% down? thanks a lot David. You’ve been a lot of help. And I love your videos and information you give!
Usually 20-25% down.@@RoyallKing629
Hey, how can I get the 20% down for the DSCR Loan?
Equity from your own home. Personal loan. 401k pull. There's lots of ways
Does this cover building loans? I have a lot that I want to build a 4plex on and I need a building loan.
No it does not, you'll need a new construction loan for that. In my opinion, terms are better. Let me know if you have any questions.
Any lender in VA?
You can find investor friendly lenders in your area for free with Lender Finder! biggerpockets.com/findalender
Love the DnB intro 👾
They forget to mention the high interest rate with dscr
They discuss rate differences at 7:50
Interest is currently 7-9% which is pretty close to conventional nowadays.
But still require 20 % down payment
20% down and 6 months reserves.
@@koby29956mo reserves for the property you want to buy or for every property you own?
❤
Simple!!
Man...can you cover the debt?!
It's not hard people.
I tried to get a DSCR loan and is more complicated than people think, they need 6 months of reserves and it takes a bit to get approved it's not that easy.
Was it from a broker or direct?
@@hamsterbrigade a broker, need a decent amount of paperwork and 6 months of reserves that you can’t touch, also 20% down payment.
There are ways around the 6 months of reserves and not all lenders require 6 months. DSCR are great for a refi from a hard money loan to hold the property.
@@MattHall83what are some of the ways??
That is not always the case. Reserve requirements will vary by lender. I have some lenders that do not require reserves.
Which banks do DSCR loans?
I’d rather you reach out to a trusty knowledgeable lender not a bank. It needs a little creativity and guidance to get the right questions answered.
I’m a Mortgage Loan Originator and we do DSCR loans at Capital Federal. Let’s chat!
Him looking down every 2 seconds is a distraction .
I usually enjoy your content but the thumbnails are ridiculous
Lmao😂
1st
8th
Just send a note to The One Brokerage.
Wheres your MAGAT gear ?
Close on my 1st investment property today 🎉🎉🎉🎉 will be documenting my journey @royaltwinsPropertiesllc
How’s the journey going?
@Alexsjusa thanks for asking. I closed on my second property 2 weeks later and signed lease yesterday for tenant on the second property which is a long term rental.... face book market place is golden i had over 57 inquiries for this property In 5 days . Now im looking around for another property limited supplies on markey.hopefully I could find one before year end. 🙏
@@skylerdeanimator are you documenting your journey on social media?
Will the loan work if you have a fix and flip with no mortgage?
I don’t believe so, you have to have a positive cash flow for you to qualify for a DSCR
Yes, as long as the property cash flows.