New DSCR Mortgage Loan Programs | Valor Lending Group
Are you interested in one of our New DSCR Mortgage Loan Programs?
Would you prefer NOT to use DTI criteria?
Valor Lending Group has got you covered!
VALOR LENDING GROUP HAS THE NEW DSCR MORTGAGE LOAN PROGRAMS THAT YOU HAVE BEEN SEARCHING FOR!
New DSCR Mortgage Loan Program
If you are a borrower who prefers NOT to use DTI criteria or if you are unable to meet the requirements of an conventional loan this loan program may be the right one for you. This type of new DSCR loan program is based on reserves, payment history and credit depth. Some of the highlights include, loan amounts up to $3.5 Million, option to vest in LLC and 30 day assets seasoning, which is normally 60 days.
What is a DSCR Investment Property Loan?
Sometimes called “Investment property loans” or “rental loans,” DSCR investment property loan does 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.
Why Use a DSCR Investment Property Loan?
Traditional mortgage lenders require tax returns, W-2s, and paycheck stubs in order to determine monthly income. Salaried and hourly borrowers would require the lenders to look at gross income for qualifying purposes. But for self employed borrowers, traditional mortgage lenders look at net income, the adjusted gross income showing on tax returns. This puts real estate investors and other self employed borrowers at a disadvantage.
However, rental loans are a great way for real estate investors to qualify for both acquisitions and refinances, without requiring bank statements or tax returns, and without having to qualify using a debt to income ratio. (Bank statement loans are also a great option for self employed borrowers, to learn more about bank statement loans click here.)
Borrowers that fall outside traditional underwriting guidelines but are looking for long term loans with more attractive rates than hard money loans can use the DSCR investment property loan to their advantage. These loans do not require tax returns, income or employment, or debt to income ratio calculations.
DSCR loans provide the flexibility and lessened documentation of hard money loans, but with rates closer to traditional financing.
This is a constantly evolving area of real estate financing that offers a powerful way to grow your real estate portfolio.
What is the BRRRR Real Estate Strategy?
The BRRRR (Buy, Rehab, Rent, Refinance, Repeat) real estate strategy is a real estate
investment strategy that involves buying distressed properties, rehabbing the properties
and renting them out to cover the mortgages. Then cash-out refinancing the properties
and using the profits to fund further rental property investment. Purchasing distressed
properties at a discounted price is key to making a profit with a BRRRR Strategy.
B is for BUYING
Investors that use this method shouldn’t buy just any old property. It is important to
make sure that you are making a sound investment and that it is a good deal. You want
to make sure that you do your research and have a good timeline laid out for how long
renovations will take and when you can get the property rented out. Finding a distress
property to purchase is the easy part. It’s the financing that could be the hard. Valor
Lending Group has over 100 lenders that specially fund investment Bridge, Fix and Flip,
DSCR, and Construction loans. No matter what level of rehab the property is in, Valor
Lending Group can find the right lender for you.
R is for REHABBING
Rehabbing a property is the most time-consuming stage of the BRRRR method. Making
sure it is safe, habitable, and up to the rental market standards in your area is very critical. There should be some thought about the level of upgrades the property needs depending on its location and market rents. You never want to rehab a property under or over in a specific neighborhood.
When using the BRRRR method you should have a clear scope of work that needs to be
done on the property and how much it is going to cost to get it move in ready. You run
the chance of losing money if you don’t have a plan of attack when it comes to time and
cost.
The main aspects to focus on to receive the highest return on your investment is
updating the kitchen and bathrooms. Also, making sure that there are no hazards.
R is for RENTING
Renting your newly rehabbed property to new tenants is one of the most important
stages of the BRRRR real estate strategy. This will lock in your passive income and able
you to continue your BRRRR method. Many investment property loans are based strictly
off gross monthly rent and the ability to cover the principle, interest, taxes, and
insurance payment. Getting the highest and best rental income will become a key factor
into the BRRRR equation. See more on financing below.
R is for REFINANCING
Refinancing the newly rehabbed property is very important. This will allow you to access
equity to purchase more properties to build your SREO. Most common investment
property financing is a DSCR loan. DSCR stands for Debt Service Coverage Ratio. The
ability to produce enough rent to completely cover their PITI payments. The higher the
ratio gets, the easier it becomes for that entity or person to obtain financing for the
investment property. DSCR is gross rents divided by 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. This program is excellent for
investors due to no taxes or income.
R is for REPEAT
Repeat is the final stage of the BRRRR method. Repeat the stages in order to maximize
your real estate wealth. When repeating, always take notes during the process so you
know what worked and what didn’t on the next round of the BRRRR method
Whether you’re a avid real estate investor or purchasing your first investment property,
the BRRRR method can be used to your advantage.
Bottom Line
DSCR investment property loans are a great way to avoid hard money with a viable long
term financing solution for real estate investors. The lessened documentation and
underwriting requirements are similar to hard money loans, while rates and fees are
more akin to traditional loans.
Whereas traditional mortgage lending requires tax returns during the loan approval
process, investment property loans do not. With these loans, real estate investors are
able to purchase or refinance a property with no employment required, no personal
income considered, and no debt-to-income ratio developed. The only cash flow that matters is the rental income. That’s it. If the property debt services, the property will qualify.
The BRRRR real estate strategy is a beneficial method for real estate investors. Whether
you’re an avid real estate investor or purchasing your first investment property, the
BRRRR method can be used to your advantage.
Valor Lending Group is here to help you with all our your mortgage loan needs!
We offer EVERY mortgage loan in the book!
We are standing by for your call TODAY!
Recap of our Loan Products
- Hard Money Loans (20% down / minimal documentation) Typically Fund in 7-10 days.
- Stated Income Loans (Great for business owners and self employed ) No tax returns!
- 100% financing is available (we can cross collateralize other properties if there is enough equity)
- Valor VA Home Loan 100% financing up to $1.5MM
- Rental Property Loan – No tax returns or DTI calculation! Based on subject property cash flow – No DSCR Coverage needed!
- Flipper & Rehab Loans (Flip a property with one of our many options)
- 2nd Position Loans up to $5mm
- Raw Land & Lot Loans
- Ground up Construction for spec homes, custom homes and commercial ground up.
- Farms, Vineyards, Ranches and Agricultural Properties (25-30% down)
- 10% down Jumbo’s up to $1.5mm
- Manufactured Housing / Mobile Homes (20% down / 600+ credit score)
- Acreage Properties
- Commercial Loans up to $500mm
- 3% & 5% down Conventional Loans– LPMI (Lender paid mortgage insurance)
- Foreign Nationals Loans (no social security or residency required)
We Also Offer:
- Conventional Conforming Loans
- High Balance Conforming
- Jumbo Loan Financing | 10% down Jumbo to $1.5mm
- FHA, USDA
- Reverse mortgages up to $1 Million Value
- Cash Out Refinancing
CONTACT ME TODAY for immediate attention to your scenario!
We are here to help you understand everything you need to know about our new DSCR mortgage loan programs!
**Rates and terms subject to change without notice**
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