1. Investor Eligibility Requirements
Personal and Financial Status
- Minimum Credit Score (FICO)Typically 640 or higher. Note that lower scores (e.g., 680 vs. 740) may require higher down payments or result in a lower Loan-to-Value (LTV) ratio.
- Relevant Investment ExperienceProof of current ownership of investment property or a history of successfully managing real estate assets is often required or preferred by lenders.
- Reserve Funds DocumentationLiquid assets (cash, stocks, bonds) sufficient to cover 6-12 months of the Property’s full Principal, Interest, Taxes, and Insurance (PITI) payments after closing.
2. Property & Collateral Requirements
Property Eligibility & Valuation
- Eligible Property TypesSingle-family residential (SFR), condos, planned unit developments (PUDs), 2-4 & 5-10 unit multi-family properties. The property must be non-owner-occupied.
- Minimum DSCR RatioThe DSCR is calculated by dividing the estimated gross rental income by the PITI mortgage payment. A ratio of 1.0 (cash flow positive) is generally required, though lower ratios (e.g., 0.75) may be permitted with higher rates lower LTV.
- Mandatory Appraisal and Rent SurveyA full professional appraisal is required. Crucially, it must include a Rent Survey (Form 1004) to determine the property’s Fair Market Rent, which is the figure used in the DSCR calculation.
3. Required Documentation for Submission
Documentation and Financial Proof
- Business Entity Documents – If borrowing under an LLC, Corporation, or Trust: Articles of Organization/Incorporation, Operating Agreement, and the EIN confirmation.
- Asset and Funds Verification – Two consecutive months of bank, brokerage, or retirement statements to verify funds for the down payment, closing costs, and the required PITI reserves.
- Insurance and Title Commitments – Proof of hazard insurance with replacement coverage and a preliminary title report to ensure clear ownership and identify any existing liens or encumbrances.
- Executed Purchase Contract – A fully executed Purchase Agreement showing all terms and conditions of the property acquisition (if financing a purchase).
This expanded checklist simplifies the DSCR loan process. When you partner with DSRIQ, we guide you through each detailed requirement, ensuring you meet all criteria for a successful closing without delays.
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