Investing in real estate can be a lucrative venture, especially when you have the right financial tools at your disposal. At DscrMortgage.com, we understand the unique challenges and opportunities that come with purchasing non-warrantable condominiums. Today, we’re excited to share a success story that highlights how our DSCR cash flow loan can turn potential obstacles into opportunities.
Scenario: Navigating Non-Warrantable Condos
An experienced investor recently set their sights on a high-potential condominium priced at $850,000. However, the condo came with a significant challenge: a high investor concentration of 87%, which classified it as non-warrantable. Non-warrantable condos often face stricter lending criteria, making traditional financing options less viable. Additionally, the condo association offers front desk check-in and cleaning services, adding another layer of complexity to the financing process.
Despite these hurdles, the investor was determined to proceed, leveraging the property for short-term rental income. With a solid FICO score of 748 and a 75% Loan-to-Value (LTV) ratio, the investor needed a flexible and efficient financing solution. By leveraging our DSCR cash flow loan, this experienced investor was able to overcome the challenges of purchasing a non-warrantable condo and utilize the property’s full potential as a short-term rental.
The Non-QM Solution: DSCR Cash Flow Loan
Enter our DSCR (Debt-Service Coverage Ratio) cash flow loan, a perfect fit for this scenario. Unlike traditional loans that require extensive analysis of employment, personal income, and debt-to-income ratios, our DSCR product focuses on the property’s income-generating potential. Here’s how it works:
Qualification Criteria:
– Unlimited Investor Concentration: Our non-warrantable condo guidelines allow for unlimited investor concentration, making it easier to secure financing for properties like this one.
– DSCR Ratio: The qualification is based on a DSCR ratio. For this scenario, with a 75% LTV, the required DSCR ratio is 1.00.
DSCR Calculation:
– Formula: Debt-Service Coverage Ratio = Average Monthly Gross Income * 80 / Proposed [P]ITIA*
– Income Calculation: To determine the average monthly gross income, we use the lower of:
– (a) 12-month average of short-term rental income, or
– (b) Market rent from FNMA Form 1007 or Form 1025, as applicable.
DSCR Loan Highlights
Our DSCR cash flow loan offers several attractive features that make it an ideal choice for investors:
– Minimum FICO Score:660
– Loan Amounts: Ranging from $100,000 to $2.5 million
– DSCR Flexibility: Purchase transaction minimum DSCR as low as 0.75%
– Gift Funds: Allowed
– Reserves: 3-6 months on the subject property only
– Cash-Out Option: Available to cover reserve requirements
If you’re an investor looking to maximize your real estate portfolio’s potential, our team is here to help. Contact us today to learn more about how our DSCR mortgage solutions can work for you.
