Discover New DSCR Investment Loan Programs | No Tax Returns
Valor Lending Group
Are you interested in learning about Valor’s DSCR Investment Property Loan programs?
Today rental loans have competitive financing for residential properties and they have Cash-Out refinancing available for investment properties that are currently owned.
The National Association of Home Builders (NAHB) conducted a recent examination on rental housing using U.S. Census data. They found that 86% of rental properties in the U.S. are single family residences; two-to four-unit residences being the next most common type of rental property.
We have helped thousands of Californians and real estate investors nationwide. There is no question too big or too small that we won’t be able to help you with. We pride ourselves on our top-notch communication skills to tackle any situation that comes our way. Reach out to us today, and one of our loan officers will get back to you ASAP with advice you can trust.
Valor Lending Group is here to help you lock down a loan TODAY!
New 15% Down DSCR 1-4 Unit Investment Property Loans | 15% Down on a DSCR loan up to 1.5 Million | Minimum 680 middle FICO score
Serving up EVERY mortgage loan in the book for California!
We also have the very best communication, rates, and turn times.
What is a DSCR Investment Property Loan?
Sometimes called “Investment property loans” or “rental loans,” no tax return investment property loans do not consider a borrower’s income in the traditional sense.
The “cash flow” is just the monthly rental amount the property brings in. For example, a property renting for $2,000/month would be attributed a qualifying income of $2,000/month. The main requirement for these investment property loans is that the monthly rents cover the monthly expenses. It is that simple.
Not only is a borrower’s income not considered in the loan application process, investment property lenders do not request income amounts, in fact there is no income verification of any kind. No letters from employers, no W2s, and no pay stubs. Again, the income of the investment property is simply the cash flow of the property.
What is Debt Service Coverage Ratio (DSCR)?
The DSCR = Properties Current Rents / New PITI (principal, interest, taxes and insurance) monthly Payment. If your property is collecting rents that covers your current PITI Payment your property debt services aka your properties rents cover your total mortgage payment.
Example of DSCR Calculation: New P&I = $1,851.26 + 758.53 taxes + $147 insurance = $2,756.79 PITI | $3200 Current Rents/$2756.79 = 1.16 DSCR
Debt service coverage ratio (DSCR) is one of many financial ratios that lenders assess when considering a loan application. This ratio is especially important because the result gives some indication to the lender of whether you’ll be able to pay back the loan with interest. A ratio over 1 is good, and the higher the better.
The minimum DSCR a lender will demand depends on macroeconomic conditions. If the economy is growing, lenders may be more forgiving of lower qualifying ratios.
Here’s how to interpret your DSCR:
- DSCR < 1: You have negative cash flow. You don’t have enough rental income to service the debt (New PITI payment).
- DSCR = 1: You have exactly enough rental coming in to service the debt (New PITI payment), but you don’t have an additional cash cushion.
- DSCR > 1: You have positive cash flow. The higher your DSCR, the more income you have to service the debt (New PITI payment).
DSCR – Example
For example, assume an investment property is rented for $2,000/month. Assume also the property has the following monthly expenses.
Principal & Interest $1,000/mo
Property Taxes $250/mo
Insurance $120/mo
HOA Dues $130/mo
TOTAL PITIA $1,500/mo
In this example, the DSCR = $2,000 Monthly Rent / $1,500 Monthly PITIA = 1.33.
No-tax-return investment property lenders generally want to see DSCR above 1.00, and sometimes offer better pricing if the DSCR is above 1.25-1.50.
Advantages & Disadvantages
1) Pros of No-Tax-Return Investment Property Loans
- No tax returns required
- No employment or income required
- Personal or business income not considered
- No debt-to-income (DTI) ratio developed or considered
- Allows real estate investors and self-employed individuals to qualify when they otherwise cannot
2) Cons of No-Tax-Return Investment Property Loans
- Larger down payment than traditional loans
- Rates are slightly higher than traditional loans (but not much more)
- Some (but not all) lenders require landlord experience
- Personal credit still plays a role
New DSCR Investment Property Loans | Highlights:
- No Tax Returns
- Employment NOT Required
- No Income Required
- No Debt to Income Ratio Calculated
- Cash Flow based on Subject Property rents | if property is vacant upon purchase market rents from the appraisal will be used to calculate DSCR
- SFR, Condo and 1-4 Unit
- Maximum Loan $2.5M | Purchase and R/T Refinance
- Maximum Loan $2M | Cash out Refinance
- Unlimited Financed Properties OK
Don’t let rising rate prevent you from acquiring more investment properties!
We also have solutions to access capital through a refinance with rate that will let your properties cash flow.
CONTACT ME TODAY for immediate attention to your scenario
**Rates and terms subject to change without notice
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