How to Get a DSCR Loan in 3 Steps

Getting a DSCR loan can be not only easy but rewarding as well. If you want to close a real estate deal fast and easy, simply follow these three simple steps. Begin by answering these questions, and you’ll be on your way to getting a loan that’s perfect for you and your cash flow.

Step 1: Check Your Rent Coverage

First, ask yourself: does your rent cover all your costs? This includes:

• Mortgage payment
• Taxes
• Insurance
• HOA fees

While it’s not always necessary, having your rent cover these costs can help you get better rates as well as higher loan-to-value products. At the very least, aim to charge rent that covers your monthly payments. However, if your rent does cover these costs, then you’ve passed the first step!

Example: Imagine you own a rental property. Your mortgage payment is $1,200, your taxes and insurance are $200, and your HOA fee is $100. Your total monthly cost is $1,500. If you charge $1,600 in rent, you cover all your costs and even make a little extra.

Step 2: Review Your Credit Score

Next, consider your credit score. You can get a DSCR loan with a score in the low 600s, but it will cost you more. Therefore a lower credit score can add up to one or more percentage points to your interest rate. This in turn can increase your monthly payment by $200 to $400.

Example: Let’s say you have a credit score of 620. You might get a loan with a 7% interest rate instead of 6%. On a $200,000 loan, that extra 1% could mean paying $2,000 more per year in interest.

If you need tips to raise your score, check out resources like our YouTube channel for advice on improving your credit.

Step 3: Choose the Right Lender

Finally, work with a lender who offers many options and programs. Every mortgage company has an ideal client, and you want to make sure your lender has an option that fits your needs at the lowest cost.

Example: You find a lender who offers various DSCR loan programs. One program might have a lower interest rate but higher fees, while another might offer a higher interest rate but lower closing costs. Choosing the right program can save you money and boost your monthly cash flow.

Conclusion

And that’s it! Those are the three key questions you need to answer before diving into a DSCR loan. If you find any step challenging, don’t worry. Our team is here to help you. We’re eager to set you on a path that helps you make the money you need to live the life you want.

Watch our most recent video to find out more about: How to Get a DSCR Loan in 3 Steps