We specialize in out of the box financing for investment property here in California. There are many options for investors when it comes to loans on investment property, from traditional bank loans, alternative institutional and semi-institutional funding, private hard money loans and various bridge loan options. One option we want to highlight today is investment property loans that require no income documentation - DSCR Loans for California investment property.
For investors buying or looking to refinance 1-4 unit residential properties in California, there are some very aggressive products available. Many investors have alternative income sources and don’t want to deal with the massive paperwork oftentimes required by traditional banks to obtain financing. Others may have vacant units, or may be purchasing vacant residential property. In these situations, there are alternative lending options with bankable rates, yet lesser documentation requirements than traditional bank loans offer.
Many are familiar with what are known as DSCR loans. These are debt service coverage ratio loans. They qualify based on the rental income of the property and how it relates to the mortgage, taxes, insurance (and where applicable HOA fees) monthly payments. There are many different types of these DSCR loans with different requirements.
Many banks will require a minimum DSCR of 1.25. That means that for every dollar in debt service (including taxes, insurance, HOA), they require $1.25 in rental income. Other banks may require a lesser ratio – 1.2, 1.1, 1.0, etc. On the alternative financing options we have access to, however, we can help regardless of the ratio and without the need for tax returns or other personal income documentation.
We have programs that will work with less than a 1.0 ratio, even a no ratio DSCR. We also have programs that will work with a DSCR based on market rents when units are vacant. These can help with purchases, rate and term refinances and cash out refinances. We have specialized in private money lending for many years, and these expanded guidelines for DSCR loans are allowing us to offer 30 year fixed rate loans at bankable terms to many of our hard money clients.
The loan to value allowed on these programs is typically higher than hard money. The rates are typically much lower. Best of all, the term of the loan is much longer. 30 year fixed terms rather than 2 or 3 year interest only hard money.
There are credit score requirements. Depending on the program, situation and whether it is a purchase, rate and term refinance or cash out refinance, minimum credit scores can range from as low as 620 to 680. There are other requirements as well, but for those looking to finance investment property in California and considering hard money loan options due to the inability to document income, it is worthwhile to explore the options available.
We specialize in transactions that are outside the traditional banking guidelines, and we are adept at structuring investment property loans that will close on time and make sense for our clients’ needs. Give us a call anytime at 877 462 3422. We are always happy to discuss your scenario and let you know how we may be able to assist!
Comments(0)