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DEBT SERVICE COVERAGE RATIO (DSCR) LOANS
RESIDENTIAL INVESTMENT LENDING BASED ON THE CASHFLOW POTENTIAL OF THE HOME.
DESIGNED FOR SEASONED INVESTORS LOOKING FOR A LOW-DOCUMENTATION PROGRAM, BUT WITHOUT THE HARD MONEY INTEREST RATES AND TERMS.
This is a called a DSCR (Debt Service Coverage Ratio) Program. When the appraisal is ordered, a licensed appraiser performs a standard residential appraisal report, along with a supplemental report called a Market Rental Analysis which provides the average market rent for similar homes in the surrounding area.
This number is then compared to the full monthly payment on the new loan. (example: A ratio of 1.0 means that the rent supports 100% of the new payment)
At a Glance
Minimum Down Payment
20% - for seasoned investors
30% - for new investors
Minimum Down Payment to avoid PMI
N/A
PMI (Private Mortgage Insurance)
None
Minimum mid-credit score
620 - Max 70% LTV
660 - Max 80 LTV
Min/ Max Loan Amount
$100,000 - $3MM
Loan Repayment Terms
30 years
Amortization
30 Year Fixed Rate
Prepayment Penalties
Optional, equal to 6 months interest on 80% of the original principal balance.
3 Years, 2 Years, 1 Year, or None
(see Loan Originator for Details)
Recent Housing Events
Minimum 36 months waiting period must elapse for prior Bankruptcy 7, Foreclosure, Short Sale or Deed-in-Lieu of Foreclosure
(See Loan Originator for details)
Max Seller Contributions
2% for Investment Homes
Escrows
Escrows for Property Taxes and Home Insurance required
Occupancy
Primary Residence / Second/Vacation Home / Investment
Acceptable Property Types
Single Family, Townhome/ Villa/ 2-4 Unit Multi-Family/ Condominium/ Condotel or Non-Warrantable Condominium
UNACCEPTABLE Property Types
Manufactured Homes, Modular Homes, Mobile Homes, Raw Land, Condotels, Log Homes, Dome Homes, Tiny Homes, Commercial Mixed-Use
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The loan terms for a DSCR Loan are determined by the following criteria:
DSCR Ratio - (how well the property cash-flows) - We will finance properties with a ratio of 0.75 and higher.
The applicant's middle FICO score
Size of the down payment.
Prepayment Penalty (optional) - Options include: no prepayment penalty, 1 year, 2 year, or 3 year (ask your Loan Originator for details)
The minimum down payment for seasoned investors is 20%. For first-time investors, the minimum down payment is 30%. (a seasoned investor is defined as an applicant with 12 months of landlord experienced in the past 12 months)
Applicants must have 3 active credit tradelines appearing on credit history for the most recent 12 months, *OR* 2 active tradelines for the most recent 24 months. Applicants must have prior homeownership experience in the most recent 3 years, and have a clean, verifiable residency payment history in the most recent 12 months.
If the DSCR Ratio is ≥ 1.00...
The maximum LTV is 80% for applicants with a middle FICO of 700 or higher for purchase and rate & term refinance transactions. (max LTV of 75% for cash-out transactions)
The maximum LTV is 80% for purchase for applicants with a middle FICO of 660 or higher for purchase and rate & term refinance transactions. (max LTV of 70% for cash-out transactions)
The maximum LTV is 80% for purchase for applicants with a middle FICO of 660 or higher for purchase and rate & term refinance transactions. (max LTV of 75% for cash-out transactions)
If the DSCR Ratio is < 1.00...
*NOTE: The minimum acceptable DSCR ratio is 0.75 *
The maximum LTV is 75% for purchase for applicants with a middle FICO of 660 or higher for purchase and rate & term refinance transactions. (max LTV of 70% for cash-out transactions)
The maximum LTV is 75% for purchase for applicants with a middle FICO of 660 or higher for purchase and rate & term refinance transactions. (max LTV of 65% for cash-out transactions)
The maximum LTV is 80% for purchase for applicants with a middle FICO of 620 or higher for purchase and rate & term refinance transactions. (max LTV of 60% for cash-out transactions)
If you have questions about this program, please call us today at (813) 928-9610 for more information or apply today.
Here is the formula to determine the DSCR ratio: