DSCR Loan Washington DC

What You Need To Know About DSCR Loans In Washington DC

There are a couple of things you should know about DSCR Loans in DC.

First off, the average property price in DC is extremely expensive. In fact, the average home value in DC ($610,180) is over $260,000 more than the average home value in the US ($347,716).

This puts the DC market out of reach for many aspiring real estate investors. You, or your company, need to have particularly good financials in order to qualify for a high value DSCR Loan.

In addition to extremely expensive properties, it’s worth noting that the DC housing market is currently going through a small down turn. Over the past year, home values in DC have dropped by 1.5%. This can be good news or bad news depending on your perspective. If you currently own a property in the District of Columbia, it probably isn’t the best time to sell. However, if you are looking to buy, you can potentially score a slightly discounted price on a very valuable home that should appreciate nicely over the long term.

 

DSCR Loan Washington DC Requirements

• Interest Rate: from 7.5%
• 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: 2-3%

When evaluating a DSCR Loan, it’s important to keep the following factors in mind.

Interest Rate: A 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) 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 up to 2-3% of the loan amount applies to cover administrative costs.

In summary, DSCR loan offers a fixed interest rate of 7.5%, 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 2-3%%. It is important to recognize that there several factors that determine the final interest rate offered to rental property investors in CO. 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.

 

How To Use DSCR Loans To Buy Rental Properties In DC

One of the best features of a Washington DSCR Loan is that the rental income of the investment property is factored into the loan terms. So, instead of being 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 DC, these are the main steps to follow:

• Step 1: Find 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 additional complexities involved in each of these key steps, but from a high-level perspective, these steps outline what you need to do.