Who offers DSCR loans?

Why do most banks not offer DSCR loans?

Because of what happens to the loan after closing. A bank either keeps a mortgage on its own books or sells it to the government-backed agencies. Both of those paths usually want a borrower qualified on personal income. A DSCR loan is sold to private investors who buy business-purpose rental loans qualified on the rent. That is a different market, with different paperwork and a different sales desk. Most banks never built it.

So when you ask a bank for a loan on a rental, you usually get a conventional investment loan: a full income file and a limit on how many you can have. That is a good product when you qualify. The comparison article explains when it is the better choice. It is just not a DSCR loan.

Does my bank do DSCR loans? How to check

Ask three questions, in this order. Do you offer a business-purpose loan on a rental, qualified on the rent rather than my income? Can it close with an LLC on title? Do you sell it to a non-QM investor, or keep it in portfolio? A yes to the first two means they have the product, whatever they call it. A puzzled pause means they do not. The next call should be to a specialty lender.

Some regional banks and credit unions keep a rental product on their own books, and it is worth asking. Those loans tend to be fewer, slower and tied to a deposit relationship. When one fits, it can be competitive.

What kind of lender offers them?

• Specialty, non-QM lenders that fund DSCR loans and sell them to investors.
• Mortgage companies and brokers with access to those investors' programs. That is how one application can be matched to the program that fits.
• Private and hard-money lenders, whose short-term bridge loans sometimes get called DSCR loans. They are priced for a sale or refinance within months.

The label on the door matters less than the loan behind it. Is it qualified on the property's rent? Is it sold to investors who buy that kind of loan? Is it written as a business-purpose loan? If so, it is a DSCR loan, whoever offers it.

What does Lendwise do differently?

We work with many of the investors that buy DSCR loans, in the states where we are licensed, and we match each file to the program that fits it. That matters because the programs differ. One is comfortable with a first rental, another with a short-term rental, another with a company that has several members. A single-program lender has one answer. We usually have several, and we tell you which one we would choose and why.

The honest limit is the market itself. No lender has a program for every file, and a weak ratio or thin credit narrows everyone's options. What we can promise is to tell you quickly where a file lands. The DSCR rates page shows saved rate examples with their assumptions and dates, before you decide anything.

How do I compare offers?

• Match the assumptions first: the same property, purpose, loan amount, down payment, credit score and prepayment period. Offers built on different assumptions cannot be compared.
• Compare the rate, the points and the lender fees together. Ask what the prepayment penalty costs if you sell or refinance early.
• Ask which rent the lender will count and which payment it uses. Two lenders can read the same property differently.
• Ask how many programs sit behind the quote. One program is one answer. Several programs give the file a better chance to land well.

The downsides article explains why the price moves with the down payment and the ratio. That is the context every comparison needs.

Do the big banks offer DSCR loans?

People search for this with specific names attached. We do not keep a scorecard of other lenders' products, because they change, and we would rather not be wrong about a competitor in print. The pattern we see: the large national banks and the big online lenders sell most of their investment loans through the agency channel, which means a full income file; a business-purpose option is a portfolio product you have to ask about. Check their investment-property pages and ask the three questions above.