We specialize in helping investors access strategic financing options that keep their portfolio growing. Here’s a real scenario that shows exactly how powerful a DSCR second mortgage can be.
Scenario: Investment Property
Our borrower wanted to pull equity from an existing investment property to purchase another one. With a strong 764 FICO score and a 70% CLTV, the file looked solid, but there was one challenge.
Per DSCR guidelines, we must calculate rental income using the lesser of the executed lease agreement or the market rent from the 1007 appraisal form. Using this lower number, the DSCR ratio came in at 0.93, below the minimum 1.00 DSCR required for approval on a second mortgage.
A ratio below 1.0 means the property’s cash flow doesn’t fully cover the proposed mortgage payment, typically a deal breaker.
Fortunately, we had a solution.
Non-QM Solution: DSCR Second Mortgage Program
Instead of going the conventional route, we submitted the file under our Non-QM DSCR Second Mortgage program. This product is for investors who want to keep their existing first mortgage intact while leveraging equity through a second position loan.
A DSCR loan qualifies based on property cash flow, not employment income or DTI.
The Key Advantage That Saved the Deal
When a borrower can prove they have received three months of higher rent, our DSCR second mortgage program allows us to use the higher lease amount instead of the lower of lease vs. market rent.
By using the documented higher rental income, the DSCR ratio increased to 1.00, meeting program requirements and allowing the second mortgage to move forward.
The borrower kept their low-rate first mortgage, accessed equity for their next investment, and continued scaling their portfolio, exactly the outcome every investor wants.
Program Highlights
- Minimum FICO: 680
- Loan Amounts: $75,000 – $500,000
- Qualifying DSCR: 1.00 and above
- Eligible Properties: SFR, PUD, townhomes, 2–4 units (with a 5% CLTV reduction on multi-units)
- No reserves required
- AVM allowed for loan amounts under $400,000 with a 1025 or 1007 rent schedule
- DSCR Formula:
Gross Rental Income ÷ Proposed PITIA
We are a resource for investment property HELOCs, DSCR loans, and second mortgage solutions for real estate investors. Our team understands how to structure scenarios creatively so you can keep building, buying, and investing.
Contact us for a DSCR second mortgage quote.
