What is a DSCR loan?
A DSCR loan is a mortgage secured by real estate held as an investment. It is a type of investment property loan used by real estate investors on stabilized, cash flowing rental properties. These loans are different from bridge loans and fix & flip loans as they are booked for longer terms and lower rates. DSCR loans are typically used to finance 1–4 unit SFR, townhouses, and condos. These properties are typically rented by tenants and real estate investors use the rents generated from the properties as a source of income. For serious investors looking to grow their investment property portfolio, a DSCR loan is an easy way to cash-out refinance properties that have an abundance of equity and use the proceeds to continue to acquire more properties. Utilizing long term loans such as DSCR loans in conjunction with bridge loans is a foundational aspect of real estate investing, the BRRR method in particular.
What type of loan is best for an investment property?
Getting a loan for your investment property from a traditional lender comes with stricter requirements than a conventional mortgage. If you only plan to have one or two rental properties and have excellent credit, a mortgage from a bank may suit your needs. However, for those who are self-employed or are aggressively growing their investment property or short-term rental portfolio, utilizing a reliable alternative lender may be your best choice. A DSCR loan can be used after a fix and flip loan or construction loan for a long-term financing solution without the hurdles of traditional bank underwriting.
Getting started with a DSCR loan
Webster Capital is a leading provider of investment property loans for your portfolio. Our traditional hard money loans are based strictly on the value of the asset, while longer term loans require some basic documentation. DSCR loans can typically be closed in less than 30 days and require the following documentation*:
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Leases and rent rolls. DSCR loan approval assesses the cash flow potential of your property and uses it to determine favorable rates and terms for your deal.
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Soft credit pull. No hard credit pull and better yet-- the loan does not report to your personal credit enabling you to do more deals! Typically, 670+ FICOS qualify for DSCR loans.
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Appraisal. A quick turnaround appraisal will be ordered to determine the value of the property and enable us to lock in your terms.
*This is a summary of the pre-approval doc requirements and not a complete list of all documents required in underwriting.
If you are interested in finding out more about DSCR loans, contact us today or apply online.