DSCR Loan Texas

30-year fixed DSCR Loan Texas for stabilised rental properties

Interest Ratefrom 7.5%
Origination Fee2-3%
Loan To Purchase Priceup to 80%
Loan To Valueup to 80%
Minimum DSCRNone
Term30-yr fixed rate
Minimum Loan Amount$100,000
Maximum Loan Amount$2,000,000
Minimum FICO680
Type of PropertyResidential 1-4 units

What You Need To Know About Texas DSCR Loans

There are a few things to note about DSCR Loans in Texas.

Firstly, the average property price in Texas isn’t too expensive. In fact, the average home value in Texas ($303,971) is about $45,000 less than the average home value in the US ($348,853).  Based on these numbers, it’s fair to say that the Lone Stare state offers excellent value for money. There are several high profile cities with a very strong demand for rental property, including Houston, San Antonio, Dallas, Austin and Fort Worth.

The Texas market also caters to fix-and-flip investors. Provided you can find a poorly maintained property with lots of potential, there is every reason to consider flipping a house in TX.

DSCR Loan Texas Requirements

  • Interest Rate: from 7.5%
  • Minimum DSCR: None
  • Minimum FICO: 680
  • Down Payment Required: 20%
  • Loan To Value: up to 80%
  • Loan To Purchase Price: up to 80%
  • Minimum Loan Amount:$100,000
  • Maximum Loan Amount: $2,000,000
  • Origination Fee: 2-3%

When analyzing DSCR Loans in Texas, it’s important to include the following factors in your analysis.

Interest Rate: The Texas DSCR loan carries a fixed interest rate of 7.5%, impacting the overall borrowing cost and influencing the investment’s financial feasibility.

Minimum DSCR: Notably, there is no minimum debt service coverage ratio (DSCR) for New Silver DSCR Loans, providing greater flexibility for the borrower when structuring the loan.

Credit Score: Eligibility for the loan requires a minimum FICO score of 680. Some DSCR lenders may accept borrowers with a lower credit score.

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

Loan-to-Value (LTV): The loan can cover up to 80% of either the property’s value or, which also means that the borrower is required to make a 20% down payment from the borrower.

Minimum & Maximum Loan Amounts: The minimum loan amount is $100,000, while the maximum loan amount is $2,000,000.

Origination Fee: A lender’s origination fee of 2-3% of the loan amount applies to cover administrative costs.

In summary, New Silver’s Texas DSCR loan offers a fixed interest rate of 7.5%, without a minimum DSCR requirement. To qualify, borrowers need a minimum FICO score of 680 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 $100,000 and $2,000,000. Additionally, an origination fee of 2-3% is applicable. Careful consideration of these factors will enable borrowers to evaluate whether a DSCR loan is the best fit for their needs.

DSCR Loan Texas Down Payment

At the current moment in time, investors are required to make a 20% down payment in order to secure a DSCR Loan in Texas.

DSCR Loan Texas Interest Rates

The interest rates for DSCR Loans in Texas currently start at 7.5%. However, it is important to recognize that there several factors that determine the final interest rate offered to rental property investors in TX. 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 a loan origination team will consider before offering the final terms of the DSCR loan.

How To Use DSCR Loans To Buy Rental Properties In Texas

Arguably the most important advantage of DSCR loans 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 entirety of the monthly loan repayment, the rental income that the property can produce helps to determine if the loan can be granted.

To use DSCR Loans to Buy Rental Properties In Texas:

  • 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 strategic perspective, that is effectively what you need to do.

Frequently Asked Questions

Most DSCR lenders will require a down payment from the real estate investor. Currently, the typical down payment is around  20%.

If your investment property is expected to generate positive cash flow from the get go, you can attempt to negotiate for a lower down payment. Although success is not guaranteed, there’s no harm in trying.

Most traditional lenders don’t offer DSCR loans. Instead, they focus on providing residential mortgages for home owners that plan to live in the house that they purchase.

In the end, it all comes down to the amount of risk that a lender is willing to take on. Conventional lenders tend to steer clear of loan products that are considered ‘risky’. This includes DSCR Loans, Fix-and-Flip loans and even Construction loans, and it helps to explain why real estate lenders like New Silver exist.

Despite this resistance from traditional lenders, real estate investors need capital to purchase investment properties. This creates an opportunity for DSCR Lenders to supply the capital that real estate investors require.

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