Down Payment for DSCR Long-Term Rental Loans

[@raulmendoza3039]

Can I get that loan on a vacant residential lot I own but still paying on?

[@PrivateLenderLink]

Hardly any private lenders offer loans for vacant lots. The ones that do will max out at 50% loan-to-value in 1st lien position, and the loan terms are typically 1-2 years. If by "still paying on" you mean that you already have a mortgage, it would need to be refinanced. No lender would offer a 2nd mortgage on vacant land.

[@dylanmorin8174]

What’s the DTR requirements? I’m Assuming it’s dependent on the interest rate and then dscr and amount financed? Definitely found this video informational I didn’t know about the additional loan for renovations that brings down required down payment. Interesting

[@PrivateLenderLink]

DTR is not something that lenders look at. Did you mean DTI (debt-to-income). They are mainly concerned at the subject property's income, not the borrower's income. Most lenders have a minimum DSCR of 1.2 and some consider 1.0.

[@dylanmorin8174]

@@PrivateLenderLink yes I meant dti! To my knowledge the only requirements are a somewhat good credit score and 20% down?

[@PrivateLenderLink]

Most important factor is the DSCR. After you provide the estimated monthly income to the lender, they will figure out the interest rate and calculate your expenses - mortgage, taxes, insurance. If the ratio is not high enough, you'll have to put down more than 20%. We'll produce a video about calculating DSCR next month.

[@danyolsun4120]

What if it's more than 25 percent in equity in the property. Do you still have to have a down payment

[@PrivateLenderLink]

You always have to have a down payment. Lenders don't care if you're getting a good deal. For DSCR loans, the purchase price is the value.

[@fitrican7983]

Any Lenders for DSCR in Puerto Rico?

[@PrivateLenderLink]

No, we don't know any private lenders for Puerto Rico.

[@nonwork]

So you said creative financing can not be used for down payment. If I had the liquid funds in my bank account but they were from a private loan from a family member would that not be acceptable? Lets say I structured an LLC and they were an equity partner, general partner, silent investor, etc. and I am using the LLC to purchase a rental income property. Do DSCR loans not allow for investors to make cash contributions on initial acquisition?

[@PrivateLenderLink]

I believe that would be accepted, but all members of the LLC would be a guarantor of the loan.

[@jcz777]

Can you qualify for a DSCR if you're purchasing with an LLC?

[@PrivateLenderLink]

Yes, DSCR loans are only for LLCs and Corporations. We don't know any lenders that offer DSCR loans to individuals (versus entities).

[@profitpurpose]

@@PrivateLenderLink yes they do

[@howtolife5276]

Hypothetically speaking if I raised some capital for example from an angel investor, venture capital or equity capital for a real estate business strategy/idea would I be able to use some of the money as a down payment for a DSCR loan ?

[@PrivateLenderLink]

Yes, most lenders would be fine with that, but they will not allow your capital provider to have a junior lien on the property.

[@ednasalinas5568]

To get the DSCR, how is the estimated rent calculated, by owner or the lender? Does DSCR loan involve closing cost, appraisal etc? Thx

[@PrivateLenderLink]

The owner should know the market and the estimated rent, but the lender will check their own data sources. It's fairly easy to find this data. Yes, you will definitely have to pay for closing costs and a full appraisal.