Loans for Experienced Investors

Qualify each property on its rental cash flow

A DSCR loan compares the property’s eligible rent with its payment: principal, interest, taxes, insurance and association dues. Personal income, W-2s and tax returns are not used to qualify, so each new rental is judged on its own numbers rather than on a personal debt-to-income ratio.

Standard DSCR loans run from $100,000 to $3,500,000, with up to 80% LTV on a purchase at the top credit tiers and credit scores from 640. Cash-out refinancing starts at a 660 score and interest-only options at 680. Loans under $150,000 require at least a 1.25 DSCR.

Move up to 5–8 unit and mixed-use buildings

The multi-unit DSCR program finances a single residential building of 5–8 units or a mixed-use building of 2–8 units. Loan amounts run from $400,000 to $2,000,000, with a 700 minimum credit score and a DSCR of at least 1.00. Purchase leverage reaches 75% on loans up to $1.5 million, and reserves start at six months of payments.

This program requires a track record: you must have owned and managed commercial or non-owner-occupied residential real estate for at least one year in the last three years. First-time investors and first-time homebuyers are not eligible. Connecticut, Florida and New Jersey require a 720 credit score, and the program is not available in Illinois or New York.

Put existing equity to work

A cash-out refinance can fund the next down payment or a renovation. Standard DSCR cash-out limits depend on credit score, loan balance and rent coverage. Within six months of ownership, the value is generally the lesser of the purchase price plus documented improvements or the appraisal.

If you would rather keep an existing first mortgage, a DSCR HELOC or DSCR second mortgage may fit. Compare the combined payment, fees and repayment terms against refinancing the whole balance.

Structure the portfolio for the next purchase

Eligible LLC, partnership and corporation vesting is permitted under the business-purpose guidelines. Members or managers representing at least 25% cumulative ownership sign full-recourse personal guaranties, so settle entity documents and signing authority before closing.

Selling to trade up? Replacement-property financing can be coordinated with a 1031 exchange. The guidelines require the exchange agreement, the settlement statement for the property you sold and a qualified intermediary letter. Exchange proceeds cannot count toward reserves, and reverse exchanges are not eligible.

Bring the portfolio to the first conversation

A loan officer can match the next property to the right program before you commit to a contract.

• A schedule of the real estate you own, with current leases and rents.
• Formation documents and ownership percentages for any entity that will hold title.
• The target property’s price or estimated value and its expected rent.
• Your plan for the proceeds if you are refinancing for cash.