New DSCR Investment Property Loans | Valor Lending Group

When you are embarking on the process of acquiring a rental loan it is important to have a knowledgeable team behind you that knows all the tricks of the trade. Valor Lending Group is that team!

Rental loans help real estate investors buy and hold for rental income or fix and flip for a quick profit.

Valor Lending Group offering new DSCR 1-4 Unit Investment Property Loans | 15% Down on a DSCR loan up to 1.5 Million | Minimum 680 middle FICO score | Zero Reserves

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.

Valor Lending Group has multiple funding sources for these types of rental property loans.

We also have the very best communication, rates, and turn times.

What is a DSCR Investment Property Loans?

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 – 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
2) Cons of No-Tax-Return Investment Property Loans

DSCR Investment Property Loan Highlights:

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 

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Valor Lending Group

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Valor Lending Group
CA DRE #02026238  |  NMLS #1600345

Petco Park DiamondView Tower
350 10th Ave | 10th Floor
San Diego, CA 92101
Office: (619) 344-2640
Fax: (619) 872-2400

Arizona Branch

Valor Lending Group, Inc.
Branch ID# 2245288 | MB-1030262

Eagle Ridge
1548 Hawkeye Ridge Ave
Prescott, AZ 86301
Office: (619) 344-2640
Fax: (619) 872-2400