Recently, we helped an investor overcome a tough financing scenario using a DSCR Second Mortgage.
The Challenge
Our borrower had a strong credit score of 753 and owned an investment property with significant available equity. Their goal was simple: use that equity to purchase another investment property and continue growing their portfolio. The problem was that the borrower’s existing first mortgage carried a favorable interest rate and included a prepayment penalty. Refinancing the entire loan would have eliminated the low rate but would have triggered additional costs. To make matters more complicated, the borrower’s tax returns showed a debt-to-income ratio that exceeded conventional lending guidelines.
The No-Doc Solution
Instead of replacing the first mortgage, we structured a standalone DSCR closed-end second mortgage behind the existing loan. Because this was a DSCR loan, qualification was based primarily on the property’s rental income rather than tax returns, employment history, or personal debt-to-income ratios. No employment verification was required. No income documentation was required. No DTI calculation was required. This approach allowed the borrower to:
- Keep their existing low-rate first mortgage intact
- Avoid any prepayment penalties
- Access equity without refinancing the entire property
- Qualify based on property cash flow rather than personal income
- Purchase another investment property and continue expanding their portfolio
DSCR Second Mortgage Highlights
- DSCR ratio of 1.00 or greater
- Minimum 660 FICO score
- No reserve requirements
- AVM and Rent Schedule accepted on loans up to $400,000
- Loan amounts from $75,000 to $750,000
- Available on investment properties
- No employment verification required
- No income documentation required
- No debt-to-income calculations required
Contact us to learn how a DSCR second mortgage can help you leverage your equity and continue growing your portfolio.
