FAQ

Debt Service Coverage Ratio. This is simply: Your total payment / Your total rents.

If this number is 1.0 or greater, than your rents are higher than your total payment. The higher that is, the better your rate generally is.

The ratio is calculated by dividing the property income (rental income) from the property PITIA (principal + interest + taxes + property insurance+ homeowners association dues). The resulting ratio lets the lender know how much income is available to pay the mortgage. A ratio of 1.0x means that the property that the revenue from rental income AND expenses is equal. A DSCR above 1 means the property is positively cash-flowing. Conversely, a DSCR of less than one means that the expenses exceed the rental revenue and the property has a negative cash-flow.

There’s many reasons clients prefer DSCR loans vs. Conventional financing. First, DSCR loans do not take into account your other debts beyond the PITI payment of your loan. So, if you are self employed and report very little income, using a DSCR loan may be the best option.

Secondly, a DSCR loan does not report to credit, and therefore may not affect your future ability to qualify for additional properties.

Another benefit is that a DSCR loan allows you to vest in an LLC , whereas FNMA does not allow that on traditional financing.

Rates and leverage are dependent on risk. Risk is measured on flipping experience, credit, loan details, and loan term. You are able to set your loan term from 6-18 months. The rate and allowable max leverages will be determined on a number of factors including credit profile, experience and project size. Get started today to find out where you qualify. It just takes a couple minutes to submit your application!

Great- there is no pre-payment penalty, so you can pay-off the loan at anytime, without incurring additional fees. Your interest is simply calculated by the days you hold the loan before payoff.

Generally, yes. However, approval of an extension is considered with a few factors including but not limited to, on-time payment history, project status, etc.

For Bridge and Fix and Flip loans, we can look at exceptions down to 600 with compensating factors such as experience and additional guarantors.

Yes! We love helping first-time flippers. In fact, many of our expert flippers started their first flip financing with us. With 4,000+ loans closed, we are here to help you with any questions you have including budget reviews, property valuations, and profitability analysis. Our goal is to make your flip a financial success for you!

Our technology and our experience. With 4,000+ loans closed since 2006, and our average employee having 8+ years in the industry, we’ve got you covered to close fast!

Our draws are generally reimbursed in 3-5 business days from the time of request. If you are using our draw app, you may receive them in as little as 24 hours. To make sure your draws are on time, you must be current on your loan. We pay draws on a reimbursement basis only based on your rehab budget and work completed on the property, so no receipts are necessary!

Yes, we love and protect our Brokers! To get setup, simply submit a scenario on our website or give us a call.

The top 3 factors that affect the DSCR rate include the actual Debt Service Coverage Ratio (DSCR), Loan-to-Value, and your FICO (credit score).

The higher the DSCR is on a property, the lender is able to forecast a lower risk for lending the capital since the property may be positively cash-flowing and the investor is able to pay the monthly loan payments. Loan-to-Value, or LTV, refers to the loan amount as it relates to the actual value of the property.

Typically, DSCR loans will never exceed 80% LTV. That means that the borrower needs to bring about 20% +closing costs as a down payment for the loan. The lower the LTV, the less risk for the lender, hence a better rate.

Finally, your credit score is still a factor when determining the rate. Lenders use the score and it affects the final rate for your DSCR loan.

Rates vary daily, but typically DSCR loans are .5% to 1.5% higher than a Conventional Loan. However, DSCR loans are much easier to qualify for given the fact they do not take into account your personal income.

There are plenty of options within a DSCR loan besides a 30 year fixed.
– 5/1 ARM Options
– Interest Only Options
– Loan Portfolio options, where you combine rental income on multiple properties to qualify
– Vest in a LLC or Personal Name
– Prepay or No Prepay Options- Adding a prepay penalty generally helps with a better rate
– Discount Points- The more you buydown the rate, generally the better your rate is
– Cash out or Rate / Term Refi Options- Deciding on a refi whether to pull cash out or not

If your DSCR is below .75, then you may want to explore our bridge loan options until we can get the ratio lower. Our bridge loans do not take into account the DSCR ratio. Another option is to put more money down, or buy the rate down with discount points. All of these will increase the DSCR ratio that could help you qualify.

All of our DSCR loans require taxes and insurance to be escrowed, and paid monthly with our payment.

Our Bridge, Fix and Flip and Ground Up Construction loans do not require escrows.