For those working to build a portfolio of income-generating properties, finding the best financing plan can often seem like a challenge. Fortunately, today’s mortgage marketplace offers options to help investment property buyers secure a loan. At Luxury Mortgage, we offer the Investor Cash Flow Mortgage – a home loan option that allows the borrower to use cash flow on the property to qualify. In today’s post, we’ll explore this program and explain its benefits.
What is the Investor Cash Flow Mortgage?
There are many lenders today that offer investment property mortgages with varying guidelines. At Luxury Mortgage, we have developed a unique investment property loan that puts the borrower in a more favorable position to become approved. With our program, borrowers can use the projected cash flow on the subject property to qualify for the new loan. That means borrowers can use the anticipated rent payments they will receive, even if the home is not currently rented.
What are the qualifications?
We use a specific ratio to determine eligibility and qualification for the Investor Cash Flow Mortgage. This is called the debt service coverage ratio, or DSCR.
DSCR is defined as gross rents divided by qualifying PITIA (principal, interest, taxes, insurance and any association fees). In order to qualify for the mortgage, the DSCR must be greater than or equal to 1. In other words, the gross rent must be greater than the mortgage payment, including principal, interest, taxes, insurance and association fees.
For a purchase or refinance loan, the amount used for rent will be the lesser of market rental price (per the results of an appraisal) or current rental price if there is already a lease in effect. Leases for the previous 12 months must be provided.
Benefits of the Investor Cash Flow Mortgage
There are several reasons real estate investors should consider this financing plan. Here are a few of the benefits:
- Borrowers can finance up to 80% of the property value
- Credit scores can be as low as 580
- No employment or income documentation is required
- Loan amounts available up to $4,000,000
- Competitive interest rates
What property types are eligible?
The Investor Cash Flow Mortgage can be used to finance the purchase or refinance of several types of homes, including 1-4 unit properties, mixed-use, PUDs, warrantable condos, and non-warrantable condos on a case-by-case basis.
Where can I learn more?
If you’re interested in learning more about our Investor Cash Flow Mortgage, please don’t hesitate to contact us today.
Call us today: (888) 379-0303
Four Landmark Sq. Suite 300
Stamford, CT 06901