This market continues to reshape our collective business, who we are helping, and how we are helping them. One segment that has historically been underserved is borrowers who don’t fit into the traditional lending guidelines box but have the income, credit, and assets to be deemed a good credit risk. The term for loans that serve these buyers is a non-qualified mortgage or non-QM loan. This is an expansive group of offerings that qualify borrowers based on a 1099 form, cash flow through a business, or cash flow of the property itself. In our next series of Keynotes, we will highlight some of these various loans to shed a little light on the product parameters and, more importantly, illustrate how you can leverage this information to gain more clients.

The first product we will discuss can be used with clients who are or are looking to become real estate investors. While there are many ways income property can be financed, the one we will focus on today is called a debt-service coverage ratio (DSCR) loan. DSCR is a financial metric that provides much more flexibility during the qualifying process.

Unlike more traditional mortgages that require us to verify a borrower’s income, this loan program allows us to qualify the borrower for the loan using only the DSCR, or the ratio of income generated from the property to the monthly housing expense.  

Here are the program highlights:

• Properties up to 10 units are eligible (traditional financing is a maximum of four units)

• Loan amounts up to $2.5 million

• Very flexible credit scores

• Short-term rentals allowed (Airbnb, VRBO)

• Cash out up to $1 million

• No income or employment verification required

• We can lend in almost every state

Many potential investors are left out of the rental income market, or believe that cash is the only way they can acquire units. But, with our DSCR program, they now have the opportunity to create wealth through real estate — and you and your team at Key Mortgage can make that a reality. As part of your real estate review process, you could easily incorporate this topic and have your Key Mortgage partner ready and available to help further the conversations. Let’s sit down and develop a way we can do more business TOGETHER.