The U.S. housing market has been a profitable one for landlords in recent years. Generally, rents are strong, vacancies are rare and housing remains in short supply.

Given those favorable foundations, many investors want to own more investment properties. But with high property prices and low capitalization rates, investors can feel like they’re priced out. Enter LendSure’s non-QM DSCR program, a way for investors to use leverage to finance acquisitions.

DSCR stands for debt-service coverage ratio, and these loans allow the lender to underwrite a mortgage based on the property’s rental income, rather than on the borrower’s income and financial picture.

As the name implies, DSCR loans include a ratio, calculated by comparing the property’s rental income to the ownership costs (PITIA payment). If the minimum DSCR on a given deal is 1.1, then a property that generates $3,300 in monthly rents would qualify for up to $3,000 in monthly principal, interest, property taxes and insurance costs.

 

Debt Service Coverage Ratio	=	Gross Rent Lease or Form 1007/216
		PITIA

 

For borrowers, non-QM DSCR loans are quite attractive. For one thing, to qualify, investors don’t need to produce tax returns or use their own income. The property’s rent roll is sufficient to underwrite the mortgage.

What’s more, DSCR loans allow investors to leverage the income from their other investment properties to finance the purchase of additional properties. In other words, it’s a great opportunity for the investor to build a portfolio of rental properties.

LendSure’s non-QM DSCR program is one more way for you to get loans closed and keep your pipeline full. This video gives an overview.

The Housing Shortage Continues

It looks like the U.S. housing shortage isn’t going anywhere. Homebuilding has been stalled at low levels ever since the Great Recession. Yet millennials and Generation Z are growing older, forming households and putting new pressure on the housing supply.

A lack of supply has translated to rising prices. As a result, housing affordability is a real challenge. Mix in still-high home prices and rising mortgage rates, and housing affordability is at a cyclical low.

According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index, just 38.1% of new and existing homes sold between the beginning of October and end of December were affordable to families earning the U.S. median income of $90,000. That marked the third straight quarterly record low for housing affordability since the Great Recession, trailing the previous mark of 42.2% in the third quarter and 42.8% set in the second quarter.

The affordability squeeze is troubling for first-time homebuyers. But the trend also presents opportunities for landlords—if young workers can’t afford to buy, they’ll rent.

Loan originators can offer this solution for investors looking to expand their long-term portfolios during this current housing market.

LendSure’s DSCR program

Some of the features of LendSure’s non-QM DSCR loans:

• Available for 5-8 Unit Properties with LTV up to 70%
• Loan amounts up to $1,500,000
• Cash-Out up to $500,000
• Close multiple loans for the same investor at the same time
• No limit on the number of properties owned and can finance up to 10 properties for 1 investor
• Industry-leading funding times
• No limit on the number of properties owned and can finance up to 10 properties for 1 investor
• Qualify on Interest Only Payments – Excellent for qualification and cash flow purposes, particularly with our 10-Year IO period on our 40-Year Term program
• Non-Warrantable condos and Condotels allowed
• Rate buy-down feature available

Your LendSure account executive can walk you through the process and will be available to assist the entire way.

The LendSure Way

It’s simple. We make loans that make sense. We’re not in-the-box lenders. Of course, there are numbers and ratios, and data to consider, but we know that behind every file, there’s an individual with a unique circumstance seeking a loan. We work hard to offer our common-sense take on lending to borrowers seeking funding for the home of their dreams, another addition to their investment property portfolio, or refinancing of a currently owned property.

Are you ready to grow your business? Conforming loan approval guidelines can be restrictive, but we want to offer our mortgage broker partners the education, the tools, support and the guidance they need in order to say “yes” to more of their clients.  This ensures happy borrowers and opportunities for bottom line growth. What are you waiting for? Let’s get started!

Are you ready to benefit from a commonsense approach to lending?  Contact us today to learn more about non-QM loans and how partnering with LendSure Mortgage Corp. can help grow your bottom line.