DSCR / Rental Income Jumbo

A DSCR mortgage enables you to purchase or refinance a rental property without providing your tax returns, W-2s, pay stubs or other personal and financial documents that are required for a standard mortgage.

Because real estate investors write off expenses on their properties, some may not qualify for a conventional loan. The debt service coverage ratio loan allows these individuals to qualify more easily because they don’t require proof of income via tax returns or pay stubs that investors either don’t have or that don’t represent their true income due to write-offs and business deductions.

Let’s also not forget that as an investor buys more properties and holds more mortgages, they become a higher risk in the eyes of a conventional lender. The debt service ratio loan allows these individuals to qualify more easily because the lender focuses SOLELY on the income of the property we are refinancing or buying.

A typical Non-QM Debt Service Coverage Ratio (DSCR) loan allows a borrower to qualify for a mortgage based on cash flow generated from an investment property – through a rental, for example – as opposed to their personal income.

Unlike traditional lenders, Modern Mortgage offers Debt Service Coverage Ratio (DSCR) loans for investment property mortgages. The DSCR formula is simple: as long as the rental income covers your debt service, you’ll qualify. And you can get 30-year fixed-rate loans from $100,000 to $3,500,000. No personal income or tax returns needed, and you’ll never sign a 4506.

We even offer “No ratio loans” for situations where rental income doesn’t cover the debt.
-> FICO 600
-> 6–12 months of reserves
-> Up to 80% CLTV
-> As little as 20% on down payment

Underwriting can take anywhere from a few days to weeks, depending on how quickly we receive all your documents. If you respond promptly with all of your documents then it will go much quicker for both parties involved in this process! On average on this loan, it will take 7 to 30 days for approval.

Up to $3.5 Million

Background
‍This client is a real estate agent on one of the main islands in Hawaii. He found a 2-bedroom condo that he believed was being rented out below market value on AirBnB. At the current rate, the property was profiting 25% above the new future mortgage payment.

How we made it work
‍We used the Seller’s AirBnB income over the past 12 months as our basis of income for the loan. The client put down 20% and we closed in just 35 days using only the DOCUMENTED temporary rental income to qualify (We were on “Hawaiian Time” or we would have closed faster!). The daily rental rate was raised, and the client is now debt servicing with a DSCR 1.75.

‍Time to close loan: 30 DAYS

Background
‍This client was an extremely successful radiologist with a very large income, receiving the bulk of her income from 1099’s having worked for multiple hospitals. She already owned a home and was looking to purchase a beachside investment property on the water.

She originally qualified for her primary home with her income via a 1099 only loan (no taxes needed). We were able to refinance her primary home and cash her out $500K. As a result, her mortgage payment on her primary went up.

‍The cash-out was then used as a 30% down payment (plus closing costs) on the investment property – however, because of the cash-out refinance, and increased mortgage payment on her primary home, she no longer qualified under her 1099s for the investment property, because of her new DTI (> 38%). In fact, her DTI was OVER 50%.

How we made it work
‍We were in luck as the loan amount on the investment debt serviced against rents in the area for such a home – i.e. the home she was looking to purchase would rent out for MUCH more than what her mortgage payment would be with $300K down.

We then qualified the investment property loan through only the estimated long term rental income for that home and closed in 30 days. This was a one, two deal; meaning we closed the first refinance, then closed the purchase. Both loans closed in 30 days!

‍Time to close loan: 30 DAYS