DSCR Loan FAQs

Why does a DSCR lender need an operating agreement for my LLC if its not required by the state?

This question comes up at least half the time in DSCR loans. Often, DSCR lenders will not close unless there is an operating agreement in the borrower’s file. The reason for this is that the borrower on the loan technically is the LLC. The person behind the LLC is the sponsor, or guarantor. The lender wants to know who legally has right to the property through the LLC. One of the jobs of the operating agreement is to outline who owns the LLC and what percentage they own. Typically any sponsor who owns 20-25% or more of the LLC would be required to be a signer on the loan as well. If you need a mortgage and need help with this, we can help you.

What can I do to make sure the appraiser gives me the highest value for my DSCR loan?

This is more of an art than a science but one thing that helps is making sure the property is tidy and organized. Appraisers are human beings and like any sensible person, they would rate a tidy place higher than an untidy one. The next thing that can help is if you already have comps picked out for them. If you can print them out and give them to the appraiser when they come inspect the property, this can go a long way since you’re giving them a hand. Lastly, just be courteous and nice to them. Kindness can go a long way in the end. If you need a mortgage and need help with this, we can help you.

How often do credit scores update?

Scores typically update once per month on each account. Your accounts may update on different days but typically between the 3rd and the 9th of the month covers about half of the updates. If you’re going to pay down a debt with the intention of raising your credit score, find out what day the bill is due and and make sure to pay what you’re paying before then. The account will update between 3-10 days after the due date when they report to the credit bureaus.

Am I getting the best rate on my DSCR loan?

Your rate is made up of a number of factors and they include

• Credit score: the higher your score the lower your rate. The lower your score, the higher your rate. For example, a 760 credit score would get a lower rate than a 660 credit score.
• Loan to value (LTV): The lower the loan to value ratio, the lower your rate. Our maximum here is 80. At 80, you’d get the highest possible rate. 65 LTV is a safe bet for a competitive rate
• Prepayment Penalty length: The longer your prepayment penalty, the lower your rate, the shorter your prepayment penalty, the higher your. For example, you will have a lower rate with a 7 year prepayment penalty, than a 3 year prepayment penalty.
• Adjustable Loan term or 30 year fixed: the shorter the term, the lower the rate. The longer the term the higher the rate. A 30 year fixed rate mortgage typically carries the highest rate when compared with the adjustable loans. For example, when compared, the highest rate would be a 30 year fixed, next highest would be a 10 year Adjustable, then a 7 year, then a 5 year, then a 3 year would carry the lowest rate. 

What improvements increase the property value most?

In short, improving the kitchens and bathrooms. Then comes painting, then landscaping. After that, its opening the floorplan if not done already, finishing the basement, followed by adding a home office, followed by improving the back deck. The quickest way to increasing value is to open the floorplan if its not open, then remodeling the kitchen. 

Can you do a DSCR loan on a 2 family?

Yes! You can do a dscr loan on a single family home, a two family home, a three family home, and a four family home. 5 units or above are not eligible for DSCR loans

Can you do a DSCR loan on a portfolio or 1-4 families?

Yes! 

What states can you do DSCR loans in?

All states except NY, CA, and VT

What is your minimum loan amount?

$150,000

What do you charge?

See our fee schedule here

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