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9 Benefits of DSCR Loans

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9 Benefits of DSCR Loans

DSCR ( Debt Service Coverage Ratio ) is a tool to assess the financial viability of income-generating properties.

DSCR loan program is great for you if you are looking for a financing option to invest in.

DSCR loans offer several advantages to a real estate investor investing in income-generating properties. Here are 9 benefits of DSCR loans.

1. No Personal Income Check

When applying for a DSCR mortgage loan, your clients can breathe a sigh of relief knowing that their personal income won’t be scrutinized. That’s right – there’s no need to provide mountains of paperwork or proof of their personal earnings. Instead, lenders are solely interested in the property’s cash flow.

So, if your clients are self-employed or don’t have a traditional source of income, a DSCR loan could be a game-changer for them. They won’t have to worry about jumping through hoops to prove their income or being turned down for a loan due to a lack of documentation.

2. There is No Employment Check

Picture this: Your client is a freelance writer or a gig worker and wants to invest in a rental property. He’s got his eye on a fantastic opportunity, but he’s worried that non-traditional income will disqualify him for a loan.

Well, fear not because with a DSCR loan, personal income won’t even come into the picture! That’s right, DSCR lenders focus solely on the property’s cash flow and don’t require any employment checks. So, he can invest in that rental property without worries and continue to be his own boss!

KEEP READING: Mortgage Loans For Your Self-Employed Customers

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If your clients are self-employed or don’t have a traditional source of income, a DSCR loan could be a game-changer for them. They won’t have to worry about jumping through hoops to prove their income or being turned down for a loan due to a lack of documentation.

3. DTI (Debt-to-Income) Ratio is Not a Qualification Criteria

Conventional mortgage loans have certain debt-to-income ratio criteria for qualification; DSCR mortgage loans don’t consider DTI or any other personal income documents to approve the loan, making it a convenient loan option for those customers who can’t fulfill conventional mortgage guidelines.

4. No PayStubs Required

DSCR loans do not depend on personal income, so they don’t require paystubs or W2s to assess creditworthiness. Therefore, investors with no employment or income documents can apply for this loan to buy an investment property.

5. Faster Closing

Are you tired of the long and tedious process of trying getting a conventional loan for your customer’s investment property? Well, there’s good news! With a DSCR loan, your clients can skip all the unnecessary paperwork and get their mortgage loan approved quickly.

Since DSCR loans are based on the property’s cash flow, lenders don’t need to scrutinize their personal income or employment history. This means the approval process is much faster and more straightforward than a conventional loan.

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Investors with no employment or income documents can apply for this loan to buy an investment property.

Businessman focused on real estate project | What are the Benefits of a DSCR Loan? | DG Pinnacle Commercial - Miami Mortgage Lender

6. DSCR Loans Enable Your Customers to Finance Multiple Properties Simultaneously

Purchasing multiple investment properties at once without worrying about the limitations of traditional mortgage loans. With a debt service coverage ratio (DSCR) loan, your customers will have the freedom and flexibility to finance multiple properties simultaneously, allowing them to build a robust and diversified real estate portfolio much faster.

So, if they’re ready to take your real estate investing to the next level, a DSCR loan may be just what they need to make it happen.

7. DSCR Loans Can be Applied to Different Types of Properties

When it comes to financing your customers real estate investments, flexibility is key. And that’s where DSCR loans come in. They offer versatility that can help them take advantage of various investment opportunities.

Whether they’re looking to finance a vacation rental property or a commercial space, a DSCR loan can be used. And the best part? They don’t have to go through the hassle of applying for different types of loans for each investment property.

8. DSCR Loan offers Flexible Terms

Since DSCR loans fall under non-QM loans, there are no strict guidelines for qualification. Some lenders may approve your clients mortgage loan even if they don’t meet the typical DSCR loan requirements, such as a DSCR of at least 1 or a credit score of 620 or higher.

However, the decision ultimately depends on the lender, and they may require a larger down payment and impose higher interest rates.

Middle-age woman working on her own fashion business | Mortgage Loans Your Self-Employed Customers | DG Pinnacle Commercial - Miami Mortgage Lender

When it comes to financing your customers real estate investments, flexibility is key. And that’s where DSCR loans come in. They offer versatility that can help them take advantage of various investment opportunities.

9. DSCR Loans Cater to Novice and Seasoned Investors Alike

Real estate investors who can’t fulfill the conventional mortgage guidelines can use DSCR loans to get financing without personal income verification. So, if your customers are self-employed, freelancers, or someone with not-so-perfect financial records, then your clients can use DSCR loans to finance theirs investment property.

We can help you put your strategies into action. Our programs and products are available to those who are willing to make the effort. Contact us to guide you along the way and take advantage of the many opportunities in the Real Estate Market. Call or text us at 📱 305-851-5225

This article was originally published in www.homeabroadinc.com

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Mortgage Loans For Foreign Nationals Customers

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Mortgage Loans For Foreign Nationals Customers

Does your client have to be a U.S. citizen to get a Mortgage Loan?

No, your client does not need to be a U.S. citizen to qualify for a mortgage loan. Foreign Nationals can qualify for a mortgage loan, as long as they can prove their residency status and meet the loan’s eligibility requirement.

It’s certainly possible to get a mortgage loan if they’re not U.S. citizens. In fact, a 2020 study from the National Association of Realtors (NAR) revealed that 62% of resident foreign home buyers purchased their homes with U.S.-based financing.

The process can vary depending on their residence status and other factors, but lack of citizenship shouldn’t present an issue when it comes to securing a mortgage loan. Here’s how to qualify for a mortgage as a non-U.S. citizen.

Is It Possible to Get a Mortgage Loan As a Foreign National?

Documentation requirements when applying for a mortgage loan will largely depend on your client’s resident status—whether it is permanent or non-permanent. In either case, buying a home in the U.S. is typically a matter of providing the required immigration and visa documents and meeting the loan criteria.

Meeting eligibility requirements may be challenging for some Foreign Nationals with limited credit information, as it may take some time to establish a solid history and credit score in the U.S. Fortunately, some lenders do not require borrowers to have a FICO® Score☉ and may elect to use a borrower’s international credit score to evaluate their credit history. Additionally, lenders may use non-traditional methods to assess the creditworthiness of applicants with a thin credit history or no credit score. That may involve the lender reviewing:

  • Payments for rent, utilities and other recurring bills
  • Bank account information, including recurring payroll deposits
  • Employment verification
  • Property records
Latin Mom smiling next to her daughters in a garden | Mortgage Loans For Foreign Nationals Customers | DG Pinnacle Commercial - Miami Mortgage Lender

Lenders may use non-traditional methods to assess the creditworthiness of applicants with a thin credit history or no credit score

How Residency Impacts a Mortgage?

The process of qualifying for a mortgage loan is similar to what U.S. citizens experience if you’re a permanent resident with a green card or a non-permanent resident with a work permit or valid work visa. That’s because a lawful resident of the U.S. is eligible for a mortgage loan on the same terms as a U.S. citizen, according to standards published by Fannie Mae and Freddie Mac, the government-sponsored enterprises that guarantee most mortgages originating in the U.S.

However, those standards can cause it to be more challenging for foreign nationals who don’t reside in the U.S. to qualify for a mortgage loan.

A lender may still approve a mortgage loan for a foreign national whose primary residence is outside the U.S., but that means they won’t sell the loan to a government-sponsored enterprise. In this case, the lender may require a significant down payment (as high as 30% to 50%) to help offset their risk.

Mortgage Loan Requirements for Non-U.S. Citizens

Non-U.S. citizens must establish lawful residency in the United States to be eligible for Fannie Mae, Freddie Mac and Federal Housing Administration (FHA) home loans. A borrower may meet this guideline if they have the following:

  • A Social Security number (SSN) or, alternatively, an Individual Taxpayer Identification Number (ITIN).
  • They maintain “current” and “verified” status, supported by a valid employment authorization document (Form I-766/EAD) or a green card (Form I-551), work visa or other documentation proving current immigration status.

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A lawful resident of the U.S. is eligible for a mortgage loan on the same terms as a U.S. citizen, according to standards published by Fannie Mae and Freddie Mac

Latin family taking selfie in the park | Mortgage Loans For Foreign Nationals Customers | DG Pinnacle Commercial - Miami Mortgage Lender

Legal Non-Permanent Status

Many lenders may accept specific visas instead of an EAD as proof of borrowers legal non-permanent resident status, including:

  • NATO series (NATO 1-6)
  • Canadian and Mexican NAFTA series (TN)
  • E series (E-1, E-2, E-3)
  • G series (G-1, G-2, G-3, G-4, G-5)
  • H series (H-1B, H-1C, H-2, H-3, H-4)
  • L series (L-1A, L-1B, L-2)
  • O series (O-1A, O-1B, O-2, O-3)

Documentation For Foreign Nationals

In addition to establishing your client’s legal residency status, they’ll also need to provide documentation that shows the lender they meet standard mortgage loan requirements such as:

  • Employment and income verification: Be prepared to show recent pay stubs and W-2 forms covering the past two years. If you’re self-employed, 1099 forms from the past two years and/or a current profit and loss statement may suffice.
  • Asset verification: You may need to provide banking and investment account statements, such as savings, checking, retirement and brokerage accounts.
  • Financial liabilities: Your lender will want to understand your monthly debt obligations and certain other financial responsibilities. This includes bills for credit cards, auto loans, student loans, medical bills, alimony, child support and so on.
  • Personal information: You’ll need to provide personal identification, a Social Security card, rental history and immigration paperwork.

KEEP READING: Benefits of Soft Money Loans for Investment Properties

Two latin women having a cup of coffee on the porche | Mortgage Loans For Foreign Nationals Customers | DG Pinnacle Commercial - Miami Mortgage Lender

A lender may still approve a mortgage loan for a foreign national whose primary residence is outside the U.S., but that means they won’t sell the loan to a government-sponsored enterprise

Find a Mortgage Lender as a Non-U.S. Citizen

Regardless of your clients citizenship status, it’s always wise to compare multiple lenders to ensure your clients get the best interest rate and terms available.

Before you search for a Foreign National Mortgage Loan, do a little homework to see what type of loan your clients may be able to qualify for, such as:

  • Conventional loans: Permanent and nonpermanent residents with a credit score of 620 or above may qualify for a government-backed mortgage. If you meet other criteria like two-year employment history, consistent income and a debt-to-income ratio (DTI) below 43%, you may be able to get a mortgage with a down payment as low as 3%.
  • FHA loans: FHA loans typically come with more lenient eligibility criteria, including down payments as low as 3.5% and minimum credit scores as low as 580. Non-U.S. citizens must have a Social Security number, valid green card, visa and income to qualify for an FHA loan.
  • USDA loans: The Department of Agriculture (USDA) loans offer loans to low- and moderate-income borrowers who want to buy a home in a rural area. Non-U.S. citizens need a Social Security number and valid Employment Authorization Document (EAD) to qualify for these no-down-payment loans.

Bottom Line

We offer a variety of fixed rate, adjustable rate, and interest only Foreign National Mortgage Loan Program throughout the State of Florida. We even have access to great alternative documentation loan programs where your clients may be able to qualify using bank statements and/or assets instead of W2s or tax returns.

If you have any questions about getting your clients qualified for a Foreign National Mortgage Loan feel free to contact us (786) 380-6621

This article was originally published by Tim Maxwell in www.experian.com