The real estate market is still hot, and investors still have a large appetite for deals. However, mortgage rates have risen sharply over the past two years as the Federal Reserve has aggressively raised rates. According to Freddie Mac, the average rate on a 30-year mortgage had jumped to 7.57% as of Oct. 12, 2023. That was the highest level since 2000.
Higher rates have created headwinds for the mortgage market overall. And for borrowers with out-of-the-box needs, finding financing can be especially difficult. The mainstream mortgage market isn’t geared toward the unique needs of property investors.
Here’s a quick rundown of some of the popular investor programs we can offer to your clients:
DSCR loans. DSCR stands for Debt Service Coverage Ratio and evaluates a mortgage based on a property’s rental income, so no other income docs are required. DSCR loans enable investors with insufficient personal income to still secure financing, thanks to strong rental income. Watch this video to learn how to calculate DSCR.
The rationale behind DSCR loans is simple: Although a property investor may lack the income for conforming financing, the rental property generates sufficient income to support mortgage payments comfortably. Most lenders demand a DSCR of over 1.25x. Our program only asks for a 1.1x ratio for 5-8 unit properties. Additionally, our DSCR program has no DSCR requirement for LTV < 65% > 740 FICO in purchase transactions, 6 months of PITI reserves are required.
LendSure’s DSCR program helps you to get loans closed and keep your pipeline full while offering fast closings with minimal conditions, so the process is essentially hassle-free.
Foreign national loans. Now that the pandemic is fading and cross-border travel and investment regaining their lost momentum, we want to remind you of an often-overlooked opportunity: foreign national loans. According to the National Association of Realtors (NAR), this mortgage niche makes up $53.3 billion of annual purchase volume.
These borrowers usually have high net worth and pay their bills on time. Most are affluent, self-employed individuals living in other countries who own a home free and clear and are seeking to buy a second home or an investment property in the United States. Many don’t realize they can finance purchases in the United States because transactions in their home countries cannot be financed affordably, or must be paid in full with cash.
LendSure’s Foreign National Loan Program is designed to address the specific challenges foreign nationals encounter when seeking loan funding. Our expert team specializes in handling foreign national credit and asset verification, ensuring timely loan funding with minimal hassle.
Bank statement loans. Underwriting for agency loans is a straightforward matter of looking at W-2s, which have little wiggle room. But digging into bank statement loans requires quite a bit more due diligence. LendSure offers flexible underwriting around bank statement loans. We underwrite deals where proof of income is provided from a combination of business bank statements and personal bank statements. We also let borrowers mix and match W-2s and bank statements.
There’s no one way for a business owner to set up their bank accounts. A restaurant owner, for instance, might have separate bank accounts, one for credit card payments and another for cash transactions. A physician’s office might use one bank account for insurance company reimbursements and another account for payments made directly by patients. Understanding these nuances helps us better serve you and your clients.
At LendSure, we understand the unique needs and challenges of property investors. That’s why we offer innovative solutions and common-sense underwriting designed to provide them with more options, great rates, and smooth funding experiences.
LendSure’s Bank Statement Mortgage program offers practical underwriting for self-employed borrowers. With extensive, common-sense pre-qualifications, often within 24 hours, you can say “yes” with confidence, knowing that LendSure has minimized surprises down the road.
Full doc loans. Mortgages with full documentation carry the lowest rates. The income calculation is based on the borrower’s W-2 or 1099 earnings. If your client falls into the W-2 category, we’ll need the past year or two of W-2s, plus recent pay stubs. If your full-doc borrower is self-employed, we’ll need two years of tax returns. That includes two years of IRS Form 1040s plus two years of business tax returns or 1099 forms. If the full-doc loan is for a rental property, remember that Fannie Mae adds negative rental cash flows to the monthly debt calculation, resulting in a higher DTI. However, LendSure uses negative cash flow to offset the total income, resulting in lower DTIs and better rates.
Fix & Flip Loans. Fix & Flip Home Financing Programs offer loans designed for investors who want to leverage the purchase and renovation of a property. It’s a short-term loan, so our investor Fix & Flip solutions are created for entrepreneurs who intend to exit with the sale of the property or to refinance into a long-term rental DSCR loan.
The statistics show home flippers are still doing deals, and these clients are searching for an out-of-the-box solution for their unique needs. LendSure’s Fix & Flip program offers up to 85% of the purchase price and up to 100% of the construction cost on some loans. The total loan amount is up to 85% of the total cost.
LendSure’s Fix & Flip program offers the same common-sense underwriting and service levels you expect with LendSure’s other loan programs. Interested in learning more? Download our ‘Landscape of Investment Financing Opportunities’ infographic here.
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 unique circumstances seeking a loan.
We work hard to offer our commonsense 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, tools, support, and guidance they need 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.