These days, more and more of our fix-and-flip clients are pivoting to a longer-term buy-and-hold strategy. With so many unknowns in the current economy, it can be a smart decision. Luckily, our rental/DSCR loan product can fill the bill nicely.
To qualify, you won’t need to provide tax statements or proof of income. Rather, we will need to see current or estimated market rents to make sure that you’re able to cover your debt load and estimated expenses on a monthly basis.
✔️ Leverage To 80% of LTV (75% For Cash Out)
✔️ Residential 1-4 Unit & 2-8 Unit
✔️ 30 Year Fixed or 10-year ARM
✔️ Minimum Credit Score 660+
✔️ Interest-Only Options
Qualifying On Interest-Only DSCR Loans
For these interest-only DSCR loans, your monthly loan payment won’t include any payment towards the principal. It is based on interest on the principal plus escrows for taxes and insurance.
Remember that this interest is your monthly loan payment, but it is not your property’s total monthly expenses. If your loan is a DSCR, you also have to consider taxes, maintenance, insurance, and HOA fees to know your actual monthly expenses.
Pros of Interest-Only DSCR Loans
There are two major advantages of interest-only loans:
- Cash Flow – Interest-only loans lower your payments, which makes for less money out and more money in. With the interest-only option, you can qualify for deals that would never work with a typical loan payment.
- Flexible Refinance – You can refinance your interest-only loans at any time. Most DSCR loans do contain prepayment penalties so it is important to know your loan terms and your options. It can be a great strategy to use an interest-only loan for the next four or five years while rates are high. When rates come back down, you can refinance into another loan product that will build equity.
Want to get a quote on your next project—interest-only or not? Click the link below, and we’ll be in touch.
Feel free to reach out to your loan officer with any questions about rental loans or whatever else is on your mind. Don’t know who your loan officer is? Text or call 888.444.3160 or email firstname.lastname@example.org to be put in touch.
We look forward to working with you!