Who are the best DSCR lenders with the most competitive rates?
It’s no secret that how you finance a real estate deal can make or break the investment. That’s why the best rental property investors carefully vet and compare DSCR lenders like ABL before signing on the dotted line.
What Is a DSCR Loan?
A DSCR loan is a type of mortgage that lets borrowers qualify based on the collateralized property’s net operating income (NOI) instead of their personal income. As a result, they are typically easier to secure than traditional mortgages.
DSCR stands for debt-service coverage ratio, which is the primary metric by which DSCR lenders evaluate borrowers. Here’s how it’s calculated:
Debt-Service Coverage Ratio = Net Operating Income (NOI) / Annual Debt Service
A DSCR of 1.0 means a property generates just enough cash flow to cover its debt service, while anything less means a property won’t make enough to cover the mortgage.
Many DSCR lenders require a minimum DSCR to protect them and the borrower. At ABL, for example, the average DSCR requirement is 1.2 (although lower DSCR programs are available).
What to Look For In a DSCR Lender
Not all DSCR lenders are created equal. To ensure you have a positive borrowing experience and secure favorable loan terms, look for the following:
Direct Lender
A direct lender issues loans with its own funds instead of brokering deals to other lenders. As a result, they can offer faster, more personal service with fewer intermediary fees.
Partnership
Choose a DSCR lender that has your best interests at heart and will work closely with you to ensure a successful investment. Stay away from lenders who disappear after closing.
Local Lender
Your DSCR lender should be local and understand the nuances of your market. That way, they can help you avoid potential pitfalls and connect you with other nearby real estate professionals.
Reasonable Loan Requirements
While meant to protect the lender and borrower, a lender’s loan requirements—such as maximum LTV and minimum DSCR—should be reasonable.
Favorable Loan Terms
Seek DSCR lenders that offer favorable loan terms, such as competitive interest rates, low origination fees, and no prepayment penalties.
Fast Loan Processing
The speed at which a DSCR lender can pre-qualify, close, and fund a loan can make a huge difference—especially when competition is fierce and you need to act fast to secure a deal.
Adequate Loan Options
Ensure your DSCR lender covers your needs regarding loan type (fixed-rate mortgage, adjustable-rate mortgage, or interest-only), property type (single-family, multi-family, or mixed-use), and rental strategy (long-term or short-term).
Experience Level
The longer a DSCR lender has been in business and the more loans they’ve funded, the more expertise they will have.
Positive Reputation
Check online reviews and ratings from past and repeat borrowers to ensure the DSCR lender has a good reputation. Now without further ado,
Here are the best DSCR lenders:
1. Asset Based Lending
ABL is a direct lender that offers flexibility, speed, and the only true Zero-Point program in the industry, meaning you can pay as few as 0 points to close on a DSCR loan.
| Loan Requirements | |
| Min Credit Score | 660 |
| Max LTV | 80% |
| Loan Size | $100K+ |
| Min DSCR | Varies (1.2 is average) |
| Loan Terms | |
| Interest Rate | 5-9% |
| Origination Fee (Points) | 0-2% |
| Prepayment Penalty | None |
| Loan Processing Speeds | |
| Pre-Approval Speed | 24 hours or less |
| Closing Speed | 30 days or less |
| Loan Options | |
| Loan Structure Options | 30-year fixed, ARM, or interest-only |
| Property Type Options | 1-8 unit residential or mixed-use rentals |
| Short-Term Rental Option | Yes |
| Portfolio Loan Option | Yes |
| Experience Level | |
| Year Established | 2010 |
| Loans Funded | 6,500+ valued at $2.4B+ |
| States Serving | 36 |
| Lender Reputation | |
| Online Ratings | 525 5-Star Reviews |
2. New Silver Lending
New Silver Lending is a direct lender with 5-minute online loan approvals and a 50% repeat borrower rate.
| Loan Requirements | |
| Min Credit Score | 660 |
| Max LTV | 80% |
| Loan Size | $150K to $3M |
| Min DSCR | None |
| Loan Terms | |
| Interest Rate | As low as 6.125% |
| Origination Fee (Points) | 1-2% |
| Prepayment Penalty | Yes |
| Loan Processing Speeds | |
| Pre-Approval Speed | 5 Minutes |
| Closing Speed | 10 days on average |
| Loan Options | |
| Loan Structure Options | 30-year fixed |
| Property Type Options | 1-8 unit residential rentals |
| Short-Term Rental Option | Yes |
| Portfolio Loan Option | No |
| Experience Level | |
| Year Established | 2018 |
| Loans Funded | N/A ($1B+ applications processed) |
| States Serving | 40 |
| Lender Reputation | |
| Online Ratings | 4.7 average (based on 114 Trustpilot reviews) |
3. Kiavi
Kiavi is a direct lender that offers DSCR financing for many property types and prides itself on a successful loan exit rate of 95%.
| Loan Requirements | |
| Min Credit Score | 660 |
| Max LTV | 80% |
| Loan Size | N/A (Min property value is $75K) |
| Min DSCR | 1.1 |
| Loan Terms | |
| Interest Rate | As low as 6.75% |
| Origination Fee (Points) | Varies |
| Prepayment Penalty | None after year 3 |
| Loan Processing Speeds | |
| Pre-Approval Speed | N/A |
| Closing Speed | 30+ days |
| Loan Options | |
| Loan Structure Options | 30-year fixed, 5/1 ARM, 7/1 ARM, or interest-only |
| Property Type Options | single-family rental (SFR), manufactured homes, PUDs, 2-4 units, and condos |
| Short-Term Rental Option | Yes |
| Portfolio Loan Option | Yes |
| Experience Level | |
| Year Established | 2013 |
| Loans Funded | 16,000+ valued at $16B+ |
| States Serving | 32 + D.C. |
| Lender Reputation | |
| Online Ratings | 4.1 average (based on 349 Google reviews) |
4. Griffin Funding
Griffin Funding is a direct lender that offers DSCR financing for a wide range of loan structures and loan sizes.
| Loan Requirements | |
| Min Credit Score | 620 |
| Max LTV | 80% |
| Loan Size | $100K to $20M |
| Min DSCR | 0.75 |
| Loan Terms | |
| Interest Rate | As low as 6.875% |
| Origination Fee (Points) | N/A |
| Prepayment Penalty | Yes |
| Loan Processing Speeds | |
| Pre-Approval Speed | As few as 24 hours |
| Closing Speed | 30 days or less |
| Loan Options | |
| Loan Structure Options | 40-,30-,15-year fixed; 10-year, 7-year, 5-year, 1-year, and 6-month ARMs, or interest-only |
| Property Type Options | 1-10 unit rentals |
| Short-Term Rental Option | Yes |
| Portfolio Loan Option | Yes |
| Experience Level | |
| Year Established | 2013 |
| Loans Funded | 7,900+ valued at $3.4+ billion |
| States Serving | 45 + D.C. |
| Lender Reputation | |
| Online Ratings | 4.7 average (based on 486 Google reviews) |
5. Lima One Capital
Lima One Capital is a direct lender that has been around since 2010 and now issues DSCR loans in 46 states plus Washington, D.C.
| Loan Requirements | |
| Min Credit Score | 660 |
| Max LTV | 80% |
| Loan Size | $75K to $2.5M |
| Min DSCR | 1.0 |
| Loan Terms | |
| Interest Rate | As low as 6.90% |
| Origination Fee (Points) | N/A |
| Prepayment Penalty | None with some options |
| Loan Processing Speeds | |
| Pre-Approval Speed | N/A |
| Closing Speed | 7-10 business days |
| Loan Options | |
| Loan Structure Options | 30-year fixed, 5/1 ARM, 10/1 ARM, or 5-Year interest-only |
| Property Type Options | 1-4 unit rentals |
| Short-Term Rental Option | Yes |
| Portfolio Loan Option | Yes |
| Experience Level | |
| Year Established | 2010 |
| Loans Funded | 26K+ valued at $10B+ |
| States Serving | 46 + D.C. |
| Lender Reputation | |
| Online Ratings | 3.9 average (based on 199 Google reviews) |
Partner with ABL
Choosing the right DSCR lender can set you up for long-term real estate investing success. Work with ABL to have a reliable partner in your corner.
Since 2010, we’ve funded over 6,500 projects valued at over $2.4 for investors like you. Contact us today to discuss how we can work together or pre-qualify with no obligation!
Notes on sources:
- All information taken from DSCR lenders’ respective websites (unless otherwise cited)
- Unavailable information indicated by “N/A”
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