Daily Mortgage Rates LIVE - 10/08/2024 - Low and No Ratio DSCR Loans

In this episode of "Daily Mortgage Rates LIVE," we’re diving into the world of Low and No Ratio DSCR Loans—an innovative approach to real estate financing designed specifically for savvy investors.

Whether you’re an experienced real estate investor looking for more flexibility or just starting out, Low and No Ratio DSCR (Debt Service Coverage Ratio) Loans could be the game-changer you've been searching for. These loan options provide opportunities for borrowers who might not qualify under traditional DSCR requirements, making them a valuable tool for expanding your investment portfolio.

🔍 What makes Low and No Ratio DSCR Loans different from standard DSCR loans?
💸 Who can benefit the most from these loans, and what’s the catch?
📊 What are the key risks and rewards, and how can you make these loans work to your advantage?

Join our expert hosts as they explore how Low and No Ratio DSCR Loans allow for flexible underwriting, providing a unique opportunity for investors to qualify without the usual income hurdles. You’ll learn about the advantages, the risks, and when these loan options are the ideal fit for your real estate strategy.

If you're eager to explore creative financing strategies that can help grow your investment portfolio, this episode is a must-listen. Tune in to "Daily Mortgage Rates LIVE" and get ahead in the evolving landscape of real estate financing with insights that could help you take your next big step. Don’t miss out—subscribe and join us for this insightful discussion!

For more episodes visit: https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

About The Mortgage Calculator:

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mor

Catch all the episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

Check out all episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as thousands of Non-QM mortgage loan program variations using alternative income documentation!

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as B

Episode Transcript

Restream recording Oct 08, (00:00):
All right.

(00:00):
So welcome everyone.
My name is Kyle Hiersche I'm thecoo of the mortgage calculator
joined here by our president ofNick Hiersche our cso jose
gonzalez.
We are a lender that specializesin non QM loans.
And what we do every weekday onthe show at 11 a.
m.
Eastern is go through our actuallive mortgage rates.
And then we do a deep dive intoa different loan type.
Today's loan type is ourfavorite loan type, which is
DSCR loans.
And Jose is going to give ussome cool low and no ratio

(00:22):
options, which are absolutelymind blowing.
So before we do that though, wewill go through our rates.
So Nick, if you're ready, let'sgo ahead and pull up today's
rates and let's see what themarket is looking like this
morning.
Right.
So we will compare all ourprograms here for today.

(00:43):
It is October 8th, just after 11a.
m.
Eastern.
Not so great news for rates, butwe're still at one year lows,
remember.
Uh, we will set up a basicscenario and compare the APR
across the programs.
If you'd like a full itemizedloan to submit that itemizes all
the fees that go to the APR,please get with our team.
They'd be happy to send thatover.
For the demo today, as we doevery day, we'll set up a basic

(01:04):
scenario, a single family home,500, 000 purchase, 400, 000 loan
amount that corresponds to 80percent loan to value, 20
percent down payment.
We use an estimated 760 FICOcredit score and an estimated 40
percent to income ratio.
Some of those settings, let'smake the rates nice and big
here.

(01:26):
All right, first up is our 30year fix conventional for a
primary home.
Typically, the most commonoption people think of when they
think of a mortgage.
Rates of the list 6.
124 today.
Final APR 6.
439.
And if for any reason ourcustomer doesn't qualify for a
standard conventional, wetypically want to quote an FHA
to compare.
FHA allows more leniency oncredit issues and a higher

(01:47):
overall debt to income ratio,but does require upfront and
yearly mortgage insurance.
Rates for FHA today, 5.
25, final APR 6.
193 with all of the fees andmortgage insurance included.
So if our customer qualifies forboth, they may consider FHA if
they want to do the mortgageinsurance.
The customers that need to useit, definitely a good option.

(02:09):
And our VA options are only forour eligible vets and active
service members.
These are great programs ifyou're eligible.
Great as well as 5.
5 final APR 5.
798 standard funding fee.
So if our customer qualifies forVA, definitely going to be
better option than FHA orconventional.
So great option for eligibleborrowers.
And the final option that everybanker lender has USDA for those

(02:32):
properties in USDA eligibleareas, those rural areas of the
country.
USDA comes in today at 5.
25 final APR 5.
996.
So if our customer and theproperty qualifies and they're
going to compare against an FHAUSDA is going to be a touch
cheaper and a touch cheaper thanconventional as well.
So good option for those ruralproperties and that rounds out

(02:55):
the standard options everybanker lender has.
If our customer doesn't qualify,many banks would have to deny
them, but we have 5, 000 otheroptions starting with our non QM
alt doc.
For a primary home.
So if our borrower doesn't quitequalify using tax returns and
standard documentation forconventional FHA, et cetera, we
need to switch to alternativedocs, such as bank statements,

(03:17):
10 99s, uh, P and L all kinds ofdifferent options that we have.
We can do that here for almostidentical cost today.
Absolutely amazing.
6.
125 rate and a final APR of 6.
450, almost identical toconventional, um, which is
pretty amazing for our customersto switch to all docs for
relatively the same price.

(03:39):
And we have our investmentoption for Altdocs as well, and
tons of other investmentoptions.
Bank statement or similar comesin today, 6.
875, Final APR 7.
222, and we'll compare that toour conventional and other
investment options.
So we do have conventional, wedo not have government, so no

(04:02):
VA, FHA, or USDA, but theconventional programs do allow
investment properties, rates aslow as 6.
75, Final APR 7.
083.
A little better than the AltDocoption, but not better than our
favorite options, our DSCRprogram, Smoking Conventional,
again, DSCR stands for DebtService Coverage Ratio, no
income information needed, noemployment information needed

(04:22):
from our borrowers.
We simply use estimated rentsfrom the appraisal to determine
a DSCR value.
If the estimated rents can coverthe estimated expenses, the
property will cash flow.
That's a ratio of one or higher.
Which is preferred and with athree year prepayment penalty,
our DSCR program comes in 6.
375, finally PR 6.

(04:43):
682, beating conventional,amazing, and we can even sweeten
the deal with a five yearprepayment penalty, it drops it
a little bit, 6.
258, finally PR 6.
553, and we do have a noprepayment penalty option since
some states don't allow it andsome investors prefer not to
have one, rates today, 6.

(05:04):
75 finally PR 7.
222.
So that's a touch higher thanconventional.
I'd still say a hundred percentof investors would prefer a DSCR
option.
So if they prefer no prepay,this is the option, or you can
add a prepayment and sweeten thedeal quite a bit.
And the final two demos wealways do are 30 year fixed
second mortgages to allow ourcustomers to access their equity

(05:26):
without touching their firstmortgage.
So many customers have a firstmortgage that has lower rates
than what we can offer now.
and need some cash out.
So we can do that with either aHELOC or a fixed rate second
mortgage, which is the newoption here.
Fixed rate second mortgage forprimary coming in at 8.
125.
Lower rates than a HELOC andobviously fixed rates as opposed
to variable.
Finally PR 8.

(05:46):
542.
And the same option to get cashout of an investment property
using a second mortgage rates aslow as 9.
375.
Definitely lower than HELOC andHELOCs are very rare for
investment properties.
And if I like our 9.
731.
So those are our live demos wedo every day.
But let's get into our specialtopic today.

(06:10):
Something we don't get to do onthe live pricer.
It is a little bit, uh, rare tohave a low or no ratio for a
DSCR loan.
So, Jose is going to go into thespecific examples for that.
This would be where a property,as I mentioned, uh, typically
the options we quote on the livepricer are properties that cash
flow above one ratio, which ispreferred, so all the
programmers will pop up.

(06:31):
Jose is going to go over therare times where the property
doesn't cash flow and it's anunder one ratio, doesn't quite
cover the expenses and we canstill do the loan, but there are
caveats here.
So Jose, let's explain whatwe're talking about and then
check out some live rates.
Good morning, everybody.
Thank you for joining us forDaily Mortgage Race Live with
the Mortgage Calculator.

(06:51):
Yes, the low ratio andespecially, like we like to call
it, the no ratio.
I mean, you can call it what youwant.
We call the low ratio the onethat's 0.
75 to 0.
99 DSCR and the no ratio the onethat is less than 0.
75.
And anyway, you look at itproducts when you tell the

(07:11):
investor, yes, we can close thatloan.
Just like I told one of myinvestors the other day, cashing
out his free and clear property,putting 210, 000 in his pocket
on a property that is currentlyat about a 0.
76 DSCR, uh, at that loanamount, which is amazing.

(07:32):
Customer is so happy.
Didn't think it was going to bepossible.
Because his rent is a little lowcompared to what he wants to
get.
But, that is the beauty of thelow and no ratio option, right?
Uh, this is one that we use allthe time also for our short term
rental properties.
When we don't have short termrental comps for whatever

(07:52):
reason, AirDNA doesn't have anysuitable comps, we can always go
up to a 75%.
on the purchase of the lowratio.
So let's get right into theoptions here.
Very exciting because mostpeople don't know this exists,
uh, especially, uh, some of theextra special options I'm going

(08:12):
to share with you now.
So our first option here is forthe low ratio, 0.
75 to 0.
99 debt service coverage ratio.
Remember we are dividing thehousing expense into the gross
rent, uh, from the property.
In this case, it doesn't coveron a one-to-one basis.
Maximum LTV on this product is75%, so we are looking at 25%

(08:37):
down minimum down payment andlook at those rates.
This is not a typo.
This is for a low ratio where weare at 7.49 at par.
And we can buy that down all theway to 6.
25, previously unheard ofnumbers for this low ratio

(08:58):
product that in the not too faroff past, uh, was approaching 10
percent on the rates and nowwe're 7.
49 at par.
So now for our no ratio option.
This is where the debt servicecoverage ratio is less than 75.

(09:20):
Our maximum LTV on this optionis 70%, so minimum down payment
is 30%.
This one, theoretically, canhave a debt service coverage
ratio of 0.
8.
874%, lowest cost option at par.
And you can buy that down allthe way to 7.

(09:41):
374 at a cost of 3.
225 points.
And now I did mention to you, Iwas going to have some extra
special treats for you.
I bet you didn't know that evenat a 70 percent LTV, we could go
down to a 640.
640 minimum credit score stillattained 70 percent LTV and

(10:07):
still be between nine DSCR.
And on top of that great ratesto boot, right?
8.
75 is our lowest cost option atpar.
And you can buy that down allthe way to 7.
25 percent for our no.

(10:30):
excuse me, low, not no low ratio0.
75 to 70 percent LTV, which isgreat.
So now for some cash outoptions, yes, believe it or not.
They even let us do cash outrefines with these low and no
ratio options.
Our low ratio option here, uh,0.

(10:53):
75 to 0.
99 cash out is maximum 70percent LTV.
And 7.625 is our lowest costoption at par, and you can buy
that down all the way to 6.375%again, that is amazing.

(11:13):
And now for our no ratio,remember this is the one less
than 0.75.
So theoretically you gonna haveA-D-S-E-R of 0.1 and still
qualify for this program.
8.875% is our lowest cost optionat par.
Zero points, and you can buythat down all the way to 7.875

(11:38):
at a cost of 3.225 points at ourfor our maximum, 70% LTV point
less than 0.75, no ratio.
DSER cashout, and our lastoption here.
Again, the low credit scoreoption, uh, minimum credit score
of 640 for this option.
This is our low ratio 0.

(12:03):
cash out with a minimum 640credit score can still attain 65
percent LTV and I'm sure this ismusic to some ears out there and
I'm sure We will be gettingreached out to 8.
999 actually with a lendercredit of 0.

(12:26):
025 points.
And you can buy that down allthe way to 7.499 for a cost of
3.475 points.
So some amazing low and no ratiooptions here.
Remember, these are also greatalternatives for your short term
rental properties when you don'thave any type of short-term

(12:50):
rental comps.
So do look to the mortgagecalculator for all your low, no
ratio TSCR code.
All right.
Thank you, Jose.
I don't see any questions comingin here, but definitely amazing
programs.
You're telling me I can have aproperty that it doesn't cash
flow and doesn't only makes halfthe rent to cover the expenses
that I can still get a loan forit, Jose?

(13:12):
Absolutely.
As the equity in your creditmeets the minimum credit
requirements.
You're good to go.
And it's a loan that's based onthe cash flow of the property
and the property is not cashflowing, right?
Well, at that time, I guessthey're banking on your credit
as well.
And the equity, you know, the,the LTV obviously is a little

(13:33):
bit lower, so they're feelingpositive about that.
But yes, A program based on thecash flow of the property that
will give you the loan withoutany cash flow It's pretty cool
Okay, cool.
Well, I don't see any questions.
So we'll go ahead and wrap it upRemember that we do this at 11
a.
m Eastern every weekday where wego through our live rates and
then do a deep dive into adifferent loan type So we'll
have some cool new loan typesfor you to go over tomorrow.

(13:56):
Thank you everybody for tuningin We'll see you tomorrow 11 a.
m.
Eastern for the next episode ofdaily rates live with the boss