Investor financing
Qualify onthe rent,not your W-2.
Investor loans look at what the property earns. That opens doors for self-employed investors, portfolio builders and anyone whose tax returns undersell them.
Rental-income (DSCR) loans
The loan qualifies on the property's rent compared with its monthly mortgage costs, rather than your personal income.
- No personal income documentation to qualify, in most cases
- Purchase, rate-and-term refinance and cash-out refinance
- Single-family homes, 2 to 4 unit properties and condominiums, including some condo projects many lenders won't finance
- Close in the name of your LLC
- Finance multiple properties, each qualifying on its own rent
- Smaller loan amounts than many investor lenders will do, which fits a lot of Detroit rentals
- Some programs accept short-term rentals
- Rent can come from the lease or from the appraiser's market-rent estimate, depending on the program
Bank-statement loans
For self-employed borrowers. Personal or business bank statements replace tax returns, W-2s and pay stubs, so write-offs don't shrink the income a lender sees. Available for primary homes as well as investment property.
Which loan fits which investor
| You are | Worth a look |
|---|---|
| Buying a lower-priced Detroit rental | A rental-income loan with a smaller minimum loan amount |
| Finishing a BRRRR rehab | A cash-out refinance based on the new appraised value, once any holding period is met |
| Self-employed with big write-offs | A rental-income loan, or a bank-statement loan |
| Holding property in an LLC | A rental-income loan that closes in the LLC's name |
| Building a portfolio | Rental-income loans, each property qualifying on its own rent |
| Buying a condo others won't finance | Programs that accept some non-warrantable condo projects |
Cash-out refinancing after a rehab
Lenders usually want you to own the property for a period before they'll base a cash-out loan on a higher appraised value. Some limit the value to your purchase price plus documented rehab costs for the first months. Keep your receipts, permits and before-and-after photos.
If you bought with cash, a delayed-financing option may let you recover that cash sooner. The rules differ by program, so ask before you buy if you plan to refinance.
What to have ready
- Property address, and the lease or expected rent
- Purchase contract, or your current mortgage statement for a refinance
- LLC documents, if closing in an entity
- Bank statements showing down payment and reserves
- For a rehab refinance: your costs, receipts and permits
Mortgage services are provided through Somerset Lending Corp, NMLS #133899. Tracey Howard, mortgage loan originator, NMLS #1107565. This page is general information, not a commitment to lend or a loan offer. Loan programs, eligibility and guidelines change and vary by lender, and all loans are subject to credit approval, property eligibility and underwriting. Nothing here is tax or legal advice. Equal Housing Opportunity.