Wisconsin DSCR Mortgage Loan Qualifier

Wisconsin DSCR Loans

If you’re thinking of investing in real estate, Wisconsin is a great place to start. The state offers a variety of properties at affordable prices, along with a number of tax breaks and incentives for investors. Wisconsin is also home to a number of thriving cities, including Milwaukee, Madison, and Green Bay. Though being a real estate investor means knowing the drill: private loans come with high rates and high points, lengthy approval processes, and strict lending criteria. But what if there’s a way to avoid all that? It’s called a debt service coverage ratio loan, and it’s a type of no-income loan. With a Wisconsin DSCR mortgage, you can borrow up to 75% of the value of your property without having to show income or assets. The approval process is quick and easy, and you won’t have to worry about meeting strict lending criteria. So if you’re looking for a way to avoid high rates and points, long approval processes, and strict lending criteria, a debt service coverage ratio loan is the way to go.

What is a DSCR mortgage program?

Wisconsin DSCR loan program allows you to finance an investment property using the rental income instead of your personal income. This can be a great way to get into the investment property market without tying up all of your personal funds.

DSCR is a measure of your property’s ability to generate enough income to cover your monthly loan payments. To calculate DSCR, simply divide your monthly rent by your monthly principal, interest, taxes, insurance, and association dues (PITIA). In other words, if your monthly rent is $1,000 and your monthly PITIA is $700, your DSCR would be 1.43 – meaning your rental income covers your expenses and then some.

A high DSCR is always better for loan approval purposes. A DSCR of 1 or higher is generally considered good, which means your property is generating enough income to cover its expenses.

Another factor that lenders consider is the loan-to-value (LTV) ratio. This is a measure of how much of the loan amount is being used to purchase the property. Lenders typically want to see an LTV of 80% or less, which indicates that the borrower has enough equity in the property to cover any potential losses. The lower the LTV, the lower the interest rate will be.

In addition to interest, DSCR lenders typically charge 1 to 2 points. One point is 1% of the loan amount. So on a $100,000 loan, you’d owe the lender $1,000 to $2,000 in points. Of course, you could try negotiating with the lender to see if they’re willing to lower the points.

Benefits of DSCR loan in Wisconsin

DSCR loans are a great opportunity for investors to grow a real estate business in Wisconsin. Just take a look at some of the DSCR loan program benefits:

  • Flexible terms
  • Quick closing times
  • Minimum paperwork
  • Unlimited number of properties
  • Unlimited cash-out
  • No job history or income reports are required
  • Down payment is as low as 20%
  • Good for new and experienced investors
  • Interest-only option is possible
  • Great fit for short-term and long-term rentals
  • Up to $5 million of the loan amount
  • Borrowing through LLC or corporation is allowed

DSCR mortgage rates

According to the latest data, the interest rates on DSCR loans have been on the rise over the past few quarters.

DSCR loan interest rates are around 1.5% higher than Fannie Mae and Freddie Mac conventional rates in August 2022. The index shows that current DSCR rates average 6.77%, assuming a 30-year fixed loan with 25% down and a 1.2 DSCR ratio. So, if you’re looking to get a DSCR loan, compare the terms around and see who’s offering the best rates. Make sure to hurry – with rates this high, they’re sure to go up even more in the near future!

Apply for a DSCR loan program in Wisconsin

Many people believe that investing in rental property is out of reach, but that’s simply not true. Thanks to programs like the DSCR, anyone can finance an investment property using rental income instead of personal income.

If you are interested in an affordable loan to finance your next real estate investment project, make sure to check our DSCR loan in Wisconsin.

With our easy application process, you could have the money you need in no time at all. And once you’re approved, you can start building your real estate portfolio right away. So what are you waiting for? Get a free quote today and let us help you achieve your real estate dreams!

FAQs

The DSCR loan program is administered by the Small Business Administration (SBA). Businesses that meet the eligibility criteria can apply for loans of up to $5 million. The SBA guarantees a portion of the loan, which helps to reduce the risk for lenders and makes it easier for businesses to secure financing.

A bad debt service coverage ratio is the one that is below 1.0. This means that the borrower may have difficulty making their payments. However, each situation is unique and a low DSCR does not mean a borrower can’t take the loan, since lenders will consider many factors when assessing a loan application.

If you’re looking to improve your DSCR ratio, there are a few things you can do:

  • Try to increase your revenue and decrease your expenses. That may sound obvious, but your DSCR ratio is a measure of your ability to service your debt. Increasing your revenue without increasing your expenses will help.
  • Another option is to renegotiate the terms of your debt. If you can get a lower interest rate or extend the term of your loan, you’ll reduce your debt service requirements and improve your DSCR ratio.
  • Finally, try to increase the value of the collateral underlying your loan. If the value of your property increases, you’ll have more equity to cover any potential losses and your DSCR ratio will improve.

Whatever strategy you choose, improving your DSCR ratio is all about increasing your ability to service your debt.

The DSCR loan program offers a variety of benefits for borrowers, but there are also some eligibility requirements that must be met in order to qualify:

  • A strong credit history of at least 640
  • A good DSCR ratio and an ability to repay the loan in a timely manner
  • Provide collateral for the loan
  • 20% down payment

As you can see, the requirements are quite simple and easy to meet. And that is the main reason why DSCR loan programs are so popular among real estate investors.

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Whether you’re buying a home or ready to refinance, our professionals can help