DSCR Loan Arizona

What You Need To Know About Arizona DSCR Loans

The rental market in Arizona is currently experiencing notable shifts, characterized by rising prices and increased competition. As of July 2024, the median rent for a residential property in Arizona is $2,100, reflecting a slight decrease from the previous year. Despite this, Arizona still ranks among the higher rental markets in the U.S, with the average rent surpassing the national average.

Increased housing supply has been observed, with new residential construction permits on the rise. However, rental demand remains strong due to a steady influx of new residents, driven by job opportunities and migration from other states. This sustained demand is keeping the market competitive, with many homes still selling above the list price. The rental market in cities like Phoenix and Tucson continues to grow, supported by economic development and population growth.

DSCR Loan Arizona Requirements

• Interest Rate: from 6.125%
• Minimum DSCR: None
• Minimum FICO: 660
• Down Payment Required: 20%
• Loan To Value: up to 80%
• Loan To Purchase Price: up to 80%
• Minimum Loan Amount:$150,000
• Maximum Loan Amount: $3,000,000
• Origination Fee: 1 - 2%

If you are hoping to apply for a Arizona DSCR Loan, it’s important to keep the following DSCR Loan Requirements in mind.

Interest Rate: Arizona DSCR loans carries a fixed interest rate of 6.125%, impacting the overall borrowing cost and influencing the investment’s financial feasibility.

Minimum DSCR: Notably, there is no minimum debt service coverage ratio (DSCR) mandated, providing greater flexibility in loan structuring.

Credit Score: Eligibility for the loan requires a minimum FICO score of 660, indicating a relatively good credit history for the borrower.

Down Payment: A 20% down payment based on the property’s purchase price is necessary, reducing the lender’s risk and ensuring the borrower’s significant stake in the investment.

Loan-to-Value (LTV): The loan can cover up to 80% of either the property’s value or purchase price, necessitating a minimum 20% down payment from the borrower.

Minimum & Maximum Loan Amounts: The loan is available for amounts between $150,000 and $3,000,000.

Origination Fee: A lender’s origination fee of 1 - 2% of the loan amount applies to cover administrative costs.

Arizona DSCR loan offers a fixed interest rate of 6.125%, without a minimum DSCR requirement. To qualify, borrowers need a minimum FICO score of 660 and must provide a 20% down payment. The loan-to-value and loan-to-purchase price ratios permit up to 80% financing, and the loan amount can range between $150,000 and $3,000,000. Additionally, an origination fee of 1 - 2% is applicable. Careful consideration of these factors will enable potential borrowers to evaluate whether a Arizona DSCR loan aligns with their investment needs.

DSCR Loan Arizona Down Payment

Real estate investors are required to make a 20% down payment in order to secure a DSCR Loan in Arizona. Some DSCR lenders may allow lower down payments if you are a repeat borrower and have an excellent track record and credit score. However, for most lenders, a 20% deposit is required.

DSCR Loan Arizona Interest Rates

The interest rates for DSCR Loans in Arizona currently start at 6.125%. However, it is important to recognize that there several factors that determine the final interest rate offered to rental property investors in AZ. These factors include:

• FICO Score & Credit History
• The Investment Property
• Real Estate Investing Experience
• The Current Repo Rate
• The Local Property Market Where The Property Is Situated

There are also other considerations that the lending team will consider before offering the final terms of the DSCR loan.

Using DSCR Loans To Buy Rental Properties In Arizona

One of primary benefits of an Arizona DSCR Loan is that the rental income potential of the investment property is factored into the loan terms. So, instead of being personally responsible for making the full monthly loan repayment, the rental income that the property can produce helps determine if the loan can be granted.

To use DSCR Loans to Buy Rental Properties In Arizona, these are the main steps to follow:

• Step 1: Identify a property that can produce good rental rates
• Step 2: Ensure you have the finances to cover the down payment
• Step 3: Apply for a DSCR Loan with top-rated DSCR Lender

Obviously, there are intricacies involved in each of these key steps, but from a high-level perspective, these steps summarize what you need to do.