The era of ultra-low interest rates that helped spur a pandemic-era housing boom might be over, but the crisis in affordable housing persists. As a result, and despite of the fact that many experts are predicting a general housing recession, the overall supply-and-demand dynamic continues to favor landlords.
In other words, owning residential rental property remains an attractive value proposition for many real estate investors. If you have clients who plan to buy or refinance non-owner-occupied residential properties, with eight or fewer units, Stronghill Capital’s Investment Achiever debt-service coverage ratio (DSCR) program can help you serve their needs. Experiencing a slowdown in your conventional or government-insured purchase money and refinance business? This is an opportunity to diversify your offering, grow your pipeline and continue generating meaningful revenues and commissions.
DSCR Explained
DSCR underwriting is a way of qualifying a loan application based on a property’s income, without consideration of a borrower’s DTI ratio. DSCR is a measurement of a property’s free cash flow (i.e., Net Operating Income = Rent less Taxes, Insurance & HOA expense where applicable) available to pay debt obligations/service (i.e., Mortgage Payments). For example, if a minimum DSCR ration is 1.1x, in order to qualify, a property must generate a net operating income that is at least 110% of the monthly mortgage payment.
Rationale behind DSCR loans is straightforward. The focus is on the property and not on a borrower’s ability to repay. While an investor might not show enough income to qualify for conventional financing, the rental property can itself generates enough revenue to support repayment of a mortgage.
Best Practices
Finding the right lending partner, to meet your borrower’s needs, isn’t always easy. The process can be fraught with pitfalls. As the nation’s leader in wholesale mortgage solutions, Stronghill Capital works tirelessly to provide products and service you can rely on.
How does Stronghill ensure hassle free closings:
- Expertise: Stronghill’s management team has over 100 years in combined residential lending experience.
- Industry Leading Tech: Stronghill utilizes the latest in loan pricing engine, application onboarding and loan underwriting/fulfillment technologies.
- Responsiveness: Stronghill prides itself on providing the highest level of service, to our mortgage banker and broker partners.
Some highlights of Stronghill’s DSCR program:
- Eligible Properties: 1-4 Unit Residential, 5-8 Unit Multifamily & 2-8 Unit Mixed-Use (> 50% Residential).
- LTV’s up to 80%.
- Industry Leading Pricing, including the ability to lock rates.
- Close in the name of an Individual Borrower or a Business Entity
- No Limits on Broker Compensation, including Lender Paid Comp (YSP) and Borrower Paid Comp (Origination Fees).
The Stronghill Advantage
When qualifying an Investment Achiever DSCR loan, Stronghill does not look at a guarantor’s personal income or calculate a debt-to-income (DTI) ratio. Additionally, when underwriting a property, Stronghill will only analyze property expenses related to real estate taxes, property insurance and when applicable HOA dues. That means you never need to account for things like utilities, management expenses or cleaning fees.
We combine the features of a traditional residential mortgage, with flexible and hassle-free underwriting. This allows Stronghill to deliver quick and efficient 30- day closings with non-intrusive documentation requirements.
Stronghill Capital is a national leader in providing mortgage solutions, on a wholesale and correspondent basis. We offer industry leading pricing and predictable processes so you can feel confident in closing more deals. Our team is led by veteran mortgage professionals, with decades of experience in lending and asset management.
At Stronghill Capital, we strive to protect our clients’ best interests. We do this by making the process faster, easier, and more efficient. To learn more about “The Stronghill Advantage” and how we can help you close more loans, contact one of our Account Executives today.
