A Debt-Service Coverage Ratio (DSCR) loan is based upon cash flow from rental income. Approval for the 30-Year Rental Loan will occur if there is enough cash flow from the rental income received on a particular property to cover the outstanding monthly debt on the property.
In order to qualify for a DSCR loan from Dominion Financial, the rental income needs to be 120% of the monthly expenses including but not limited to principal, interest, taxes, insurance, and any additional dues. You do not need to provide pay stubs, tax returns, or show income to qualify.
The main benefit of a DSCR loan is that it is based on borrower credit and property cash flow, not the borrower’s personal income. DSCR loans are considered to be “low-doc” loans in comparison to conventional loans which require more documentation in order to proceed with the loan.
A conventional loan is often difficult for Real Estate Investors to achieve as they require specific guidelines in order to meet the criteria of Fannie Mae and Freddie Mac. However, a conventional loan is appealing to those who qualify as they may be able to receive a lower interest rate.
The maximum LTV is 75% and will vary based upon your creditworthiness, the property location, and the property Debt Service Coverage Ratio.
Our main program is for single-family and multifamily up to 4 units. Sometimes we are able to fund a property above 5 units but that is not our fastball. If we can, it would be a 30-year fixed-rate mortgage. All of our loans are recourse loans. For short-term multifamily funding, we offer Multifamily Bridge Loans.
There is a 6 months seasoning period. After 6 months there are no LTC restrictions. Prior to 6 months, we can refinance the lessor or 85% of total cost vs 75% of LTV.
No, we do not, only non-owner-occupied residential properties.
Getting your DSCR (Debt-Service Coverage Ratio) loan is a straightforward process that requires several documents and steps:
Short 1-Page Application: The application process is quick and uncomplicated, typically involving filling out a simple one-page form.
Proof of Insurance: You will need to provide proof of insurance to ensure that your property is adequately protected against potential risks.
Executed Lease Agreement: This document confirms that your property is generating income through rental agreements.
Purchase Settlement Statement: Providing details about the acquisition of your property, this statement is essential to the loan application.
Driver’s License, Passport, or Green Card: You must present a valid form of identification, such as a driver’s license, passport, or green card, for verification purposes.
Two Months Bank Statements: These statements offer a glimpse into your financial health, demonstrating your ability to handle the loan.
Entity Documents & W9: If you are applying for the loan as a business entity, you will need to provide essential entity documents and a completed W9 form.
Having these documents ready and following the application process will help you secure your DSCR loan with ease.
DSCR Loan Prepayment Penalties (PPP) offer flexible prepayment structures that can be customized to suit borrowers’ needs:
Variety of Options: Borrowers can choose from a range of prepayment penalty options, including zero prepayment penalties and structured plans.
Tailored to Your Goals: The choice of prepayment penalty plan can be influenced by your long-term vision and financial objectives, ensuring it aligns with your specific goals.
Popular Choice: Many clients find the 3-2-1 option to be a preferred choice, which offers a specific prepayment structure.
For Optimal Rates: If you’re seeking optimal rates, the 5-4-3-2-1 structure may be worth considering, providing a different prepayment arrangement.
When it comes to DSCR loans, these prepayment penalty options provide clarity and simplicity. If you need assistance or have questions, don’t hesitate to reach out to our team for guidance.