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Transform Your Real Estate Portfolio with DSCR Loans in Wisconsin
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
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:
- Minimum loan amount is $150K
- 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!
Buy or refinance a property with or without showing your tax returns
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!