Close Your DSCR Loan EASILY with 3 Key Steps

Are you looking to purchase a property using a DSCR loan? Great choice! These loans are all about the property’s income, as opposed to your personal income, therefore they are ideal for real estate investors. But how do you close your DSCR loan easily? Let’s take a closer look! 

Step 1: Get Yourself Approved

The first step to close your DSCR loan easily is to make sure you are personally qualified. This part is straightforward and comes down to a few key things:

• Credit Score: Typically, a credit score of 740 or higher gets you the best rates. However, a score below 640, will alter the loan terms.
• Experience: By having a seasoned landlord it will help you qualify for better loan-to-value ratios.
• Funds: Finally, you need to show where your down payment, closing costs, as well as document where the reserves are coming from. Having this money in place will speed up the approval process.

Step 2: Get the Property Approved

The lender will look at the rental income the property can generate, along with its key expenses like:

• Property taxes
• Insurance
• HOA fees (if applicable)
• Flood insurance (if necessary)

To determine the rental income, an appraiser will complete a rent schedule based on local rents for similar properties. Therefore you don’t need a lease in place to get approved. Make sure you know the property’s potential income and expenses to avoid surprises.

Step 3: Know Your Numbers

Finally, knowing your numbers is the last crucial step to closing your DSCR loan. You’ll need to understand:

• Loan-to-Value (LTV): How much of the property’s value can be covered by the loan? In some cases, a higher LTV may lead to higher rates.
• Down Payment: The amount you need to put down may vary depending on the property’s cash flow. If the income doesn’t quite cover the expenses, you may need to put more money down to make the numbers work.
• Closing Costs: These usually range between $1,500 and $2,500, but they can vary by location. You’ll also need to budget for things like appraisal fees, title costs, and reserves.

By having a clear idea of these costs and your LTV, you’ll avoid any surprises and close your DSCR loan easily. If you have more questions, contact us today to find out more.

Watch our most recent video to find out more about how to: Close Your DSCR Loan EASILY with 3 Key Steps