Thanks for joining me for another blog post, which this is a fun one to talk about. When I came into the industry, I started to hear about loan products that my office had options of but wasn’t a high volume of them coming through the door. Also, what I’ve experienced so far is that not everyone fits the mold, for documenting income, but maybe they have the assets to utilize to maximize their real estate portfolio with. With that said, let’s dive into what is called a Debt Service Coverage Ratio (DSCR) product, which meets this exact scenario.
The DSCR product is great for exactly what I mentioned, but there are some caveats to it to consider. This product is great for people who maybe want an easier loan and have found a property where the rent from the appraisal operating income and rent schedule, get documented to cover the mortgage payment. So, in essence, we want the rent from the appraisal to match with the mortgage payment, or be over that, which gives the best pricing. I will say we do offer a no ratio product, but that is limited to certain ratios and criteria. So, reach out to learn more about that.
We do offer these products based on credit score as low as 15% down, but I will say that it might be hard to get a property with that limited amount down to pencil and make sense for the rent from the property over the mortgage. Maybe where it could make sense is finding a place where the short term would rent well a month, over the long-term rent. If you are looking for long-term rent, the best option would be to bring more down to make it offset the current interest rates.
I will say though, that this is contingent on the income we get from the appraisal for the rent amount to utilize for the ratio calculation rent/mortgage payment. Yet, you are protected on this because you do have the appraisal contingency in the buy sell (make sure to select that) and the financing contingency (make sure to have your agent select that) when you put in an offer. It is our job to guide you along the journey with these, so please don’t hesitate to reach out to me with further questions on this or to receive a quote. I will say being strategic on your investment for a product like this is key, so make sure you are strategizing with your agent and myself to help guide you in the right direction.
Reach out to talk more about this awesome product, or simply, to talk about how we can build your investment portfolio and financial success in real estate.
