## Best practices and considerations for selling a rental property

 

**1.** How much would it sell for as a primary residence vs. turnkey rental? Rental investors are not likely to pay what a primary residence buyer would pay.

 

**2.** Can you sell AS IS and not conduct expensive pre-sale repairs? How might that affect your net proceeds in a sale to either a rental investor or a primary residence buyer?

 

**3.** What are the carrying costs of your vacant property? Would it make more sense to have tenants in place on a month-to-month lease or would this make it too difficult to coordinate showings (especially with COVID related health and safety concerns)?

 

**4.** Do you need to sell now or can you continue to rent (i.e. short term lease) while addressing deferred maintenance?

 

This is a lot of food for thought and everyone has a different situation when selling a rental property. We would be happy to run the numbers for you to help you figure out the best strategy for selling your rental properties.

 

## Sell with OfferMarket

 

The easiest and most cost-effective way to sell your rental property is with OfferMarket. Whether your rental property is vacant or tenant-occupied, we have handled it all and we look forward to facilitating your Here's how it works:

 

**1. Get Offers** 

 

Take 30 seconds to fill out our [Get Offers](https://www.offermarket.us/sell) request. We'll send you our no obligation marketing contract and collect property details.

 

**2. Review Offers** 

 

Compare multiple competitive AS IS, commission-free offers from qualified buyers in our network.

 

**3. Close on your timeline** 

 

Select the best offer that aligns with your timeline. Whether you need to sell in under 30 days or you have time, our rental property sales platform is designed to meet your specific requirements. Let us handle the paperwork, titlework, and coordinate closing.

 

## What our sellers are saying

 

"When I decided to sell my rental properties in Baltimore, as an out-of-state seller, I was looking for something quick and easy but I did not want to have any regrets about selling for too low a price. At first I tried working with an agent on the MLS, that turned out to take forever because we had to wait for lease expiration and multiple FHA loans fell through. Then a friend told me about OfferMarket. I only with I found them sooner! They ran a competitive campaign, brought in a mix of rental property investors and retail homebuyers, and delivered net proceeds beyond my expectations. I avoided over $100,000 in commissions. I never would have thought I'd be able to sell my rental properties so fast, as-is, with so little effort. If you're selling a rental property, use OfferMarket."

 

*Jordan R., FL*

Selling a rental property involves unique challenges. Learn best practices for selling a rental, including managing occupancy and condition.

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Selling A Rental Property - OfferMarket Blog

Selling A Rental Property

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What if instead of being reimbursed by your private lender for your rehab, you received your rehab funds in advance? 

 

We'll get back to this in a moment, but first let's take a look at the way most private lenders fund the rehab component of your fix & flip loan.

 

## Traditional Draw Request Reimbursement

 

The traditional fix & flip loan consists of an initial component for the purchase of the property and a rehab component for the renovation of the property. While the initial purchase component is advanced at settlement for the investor to purchase the property, the rehab component is typically reimbursed based on the portion of the scope of work that has been completed. 

 

It doesn't take a financial genius to understand that this is not an ideal cash flow situation, since the fix & flip investor needs to "float" the project to get to each draw reimbursement. Even the most experienced flippers and BRRR investors are forced to use credit cards and cash on hand to fund the rehab and then wait for reimbursement. 

 

Unsurprisingly, we see the following negative consequences of traditional draw reimbursement:

 

## Credit Score Impact

 

As real estate investors go through waves of high credit utilization, their credit score suffers. This can cause issues when it comes time to refinance into a DSCR rental loan and the private lender limits the LTV due to credit score below 720 -- the magic number in real estate investing.

 

## Leaving Money In the Deal: Low Cash On Cash Return

 

If your credit score is normally 740 but you just finished an intensive rehab that required using a high percentage of your credit card limit, you might find yourself in a situation where your credit score is now 670. In this scenario, at 740 FICO you'd qualify for 75% LTV on a cash out refi, but at 670 you might qualify for 65% LTV. That could easily be the difference between a perfect BRRR where you don't leave any cash in the deal, and instead leaving thousands of dollars in the deal or even worse: being forced to bring more cash to the refi closing table. In this scenario, your [cash on cash return](https://www.offermarket.us/real-estate-glossary/cash-on-cash-return) is significantly lower than it would otherwise be. Your cash that's stuck in the deal might have been your down payment for your next investment property.

 

## DSCR Loan Refinancing Delays

 

This can lead to delays refinancing out of higher interest, short term interest only fix & flip loans, and can be especially stressful in a rising interest rate environment. If you take time to build back your credit to complete your refi, you might also miss out on your next deal.

 

## Forced Selling

 

Going one step further, low credit score can prevent you from qualifying for a DSCR rental loan, and when you otherwise would have rented and refinanced the property, you're now forced to flip it.

 

Long story short, the traditional draw process is a problem and OfferMarket Capital has the solution: Advanced Draws

 

## Advanced Draws for Fix & Flip Loans

 

Wouldn't it be better if you received a wire of funds for each stage of your rehab? Let's say you're ordering $20,000 of lumber and $12,000 of windows. What if we wired you $32,000 so you never have to carry a balance on your credit card?

 

With advanced draws, we will advance your rehab funds for each stage of your scope of work. We then inspect the work in order to advance funds for your next stage, and so on.

 

## How to qualify for advanced draws?

 

As long as you've completed 5 or more fix & flip or fix & rent rehabs, you are qualified for OfferMarket's **Advanced Draws** program. We think about this a **credit score protection program**, an excellent way to optimize your refi exit strategy and do more deals. 

 

We'd love the opportunity to be your private lender.

Advanced draws help fix & flip and fix & rent BRRR investors receive funds at each rehab stage, protecting your credit score and optimizing investments.

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What is advanced draws for fix and flip loans? | OfferMarket

What is Advanced Draws for fix and flip loans?

**Last Updated:** February 8, 2025

 

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You are about to read a comprehensive guide that rethinks how you fund your investment properties using private financing for real estate loans. This guide is designed for investors who want a flexible alternative to traditional bank loans by focusing on the asset’s true value rather than relying solely on gross income figures. In the sections that follow, you will learn how [private money lenders](https://www.offermarket.us/blog/private-money-lenders) evaluate property strength, how to prepare an impeccable application, and ways to manage risk effectively—all while presenting your investment with clarity and precision. With practical advice and proven strategies, this guide offers you the tools to secure funding that aligns with your long-term goals and portfolio growth.

 

## **Understanding Private Financing for Real Estate Loans**

 

When you choose private financing for [real estate loans](https://www.offermarket.us/blog/dscr-real-estate), you opt for a method that prioritizes the inherent quality of your investment property. Traditional bank loans often impose strict income requirements and inflexible terms. In contrast, private financing shifts the focus to the property itself—its current market value, location, condition, and potential to generate income. You are encouraged to build your case with detailed documentation such as current appraisals, rental histories, and maintenance records that collectively highlight your asset’s strength.

 

This method of financing is particularly beneficial if your property exhibits strong market demand or is located in a thriving area. By emphasizing measurable, tangible data, you position yourself to secure funding under terms that match your unique situation. In other words, private financing for real estate loans offers you a flexible and responsive solution when conventional methods fall short.

 

You will also notice that private money lenders tend to evaluate your investment based on a well-rounded picture of its future performance. They focus on the long-term income potential of your property rather than solely on your personal income or [credit score](https://www.offermarket.us/blog/dscr-loan-credit-score). This approach enables you to present a comprehensive narrative that details how your asset will generate steady returns and appreciate in value over time.

 

## **The Role of Private Money Lenders**

 

[Private lenders](https://www.offermarket.us/blog/private-lender) play a pivotal role in the world of private financing for real estate loans. These lenders are individuals or entities willing to fund your investment based on the property’s merits rather than solely on standardized financial metrics. When you work with private money lenders, you benefit from a more personalized funding process that considers the nuances of your investment.

 

Your application should communicate a clear, data-driven story about your property. This includes presenting historical data, current market analyses, and future income projections. Private money lenders appreciate transparency and well-organized documentation that leaves no room for ambiguity. Their evaluation is based on a thorough review of the asset’s potential, meaning that your ability to present reliable evidence can directly influence the [funding](https://www.offermarket.us/blog/dscr-funding) terms offered.

 

Furthermore, the process with private money lenders is typically faster than that of traditional banks. Once you have compiled the necessary documents and completed a robust investment proposal, you can expect quicker responses and more [flexible repayment terms](https://www.offermarket.us/blog/dscr-direct-lenders#:~:text=3.%20Flexible%20Repayment%20Terms). This efficiency enables you to seize time-sensitive opportunities in competitive real estate markets without the delays that often accompany conventional financing.

 

## **DSCR Loans As a Private Financing Option for Real Estate**

 

Occasionally, you might come across discussions regarding performance-based evaluations. One such metric is [DSCR loans](https://www.offermarket.us/dscr-loan), where the property’s income potential is measured against its expenses. To illustrate, consider the following calculation:

 

**We use this DSCR \= Rent ÷ PITIA** 
 **Where, PITIA \= Principal \+ Interest \+ Taxes \+ Insurance \+ Association Dues**

 

This formula is mentioned here only as a brief reference. It serves as one of the many tools used by some private money lenders to assess whether a property’s rental income is sufficient to cover its operating costs. However, your primary focus should remain on compiling comprehensive documentation and realistic financial projections that emphasize the asset’s overall strength.

 

![Private Money Lending Fast, Flexible Real Estate Financing.jpg](https://cms.offermarket.us/uploads/Private_Money_Lending_Fast_Flexible_Real_Estate_Financing_409a5f4572.jpg)

 

## **Preparing Your Application for Private Financing**

 

When you decide to pursue private financing for real estate loans, thorough preparation is crucial. You must present an application that is clear, organized, and backed by factual evidence. Here’s how you can structure your [application](https://www.offermarket.us/blog/dscr-loan-application) for maximum impact:
1. **Gather Comprehensive Documentation:** 
 Collect all relevant records that demonstrate the property’s value and income potential. This includes:
 * Up-to-date appraisals 
 * Detailed rental income statements 
 * Maintenance logs 
 * Market studies and comparable property analyses 
2. **Every document should reinforce your claim about the asset’s strength.** 
3. **Develop a Clear Investment Proposal:** 
 Draft a concise plan that explains how you intend to use the funds. Outline planned property improvements, expected rental income increases, and specific timelines for achieving key milestones. A factual, data-driven narrative will build credibility and trust with private money lenders. 
4. **Compile a Detailed Financial Profile:** 
 Present a comprehensive overview of your assets, liabilities, and previous investment performance. This profile reassures lenders that you have a solid understanding of your financial situation and are capable of managing the loan responsibly. 
5. **Formulate a Risk Management Plan:** 
 Detailed strategies for handling unexpected expenses or market downturns. Explain how you will mitigate risks through reserves, insurance, or contingency funds. A well-prepared risk management plan demonstrates your foresight and commitment to safeguarding your investment. 

6. **Organize and Present with Clarity:** 
 Your application should be arranged logically, with each section clearly labeled. This level of organization not only makes it easier for private money lenders to review your proposal but also reflects your professionalism and attention to detail.

 

By following these steps, you create a compelling package that highlights the property’s value and your readiness to manage the investment successfully.

 

## **Key Considerations for Private Financing for Real Estate Loans**

 

Before you finalize your application, take the time to review several critical factors that will influence your funding prospects. The table below summarizes the essential components you need to address:

 

<div style="display: grid; grid-template-columns: repeat(1, minmax(0, 1fr)); overflow: auto; white-space: nowrap;">
<table><thead>
 <tr>
 <th>Financing Aspect</th>
 <th>What You Should Consider</th>
 </tr></thead>
<tbody>
 <tr>
 <td>Property Valuation</td>
 <td>Confirm that appraisals and market studies accurately reflect the current value and growth potential.</td>
 </tr>
 <tr>
 <td>Repayment Structure</td>
 <td>Ensure that the repayment schedule aligns with your cash flow and long-term investment plans.</td>
 </tr>
 <tr>
 <td>Interest and Fees</td>
 <td>Understand how interest rates and any associated fees affect the overall cost of financing.</td>
 </tr>
 <tr>
 <td>Documentation Quality</td>
 <td>Provide complete and precise records, including rental histories, maintenance logs, and income forecasts.</td>
 </tr>
 <tr>
 <td>Risk Management</td>
 <td>Identify potential challenges and develop contingency plans to address market fluctuations and unexpected expenses.</td>
 </tr>
</tbody>
</table>
</div>

 

By carefully addressing these aspects, you build a robust foundation for your application. Your attention to detail will help convince private money lenders that your property is a solid investment.

 

## **Practical Steps to Strengthen Your Proposal**

 

To enhance your chances of success, follow these practical steps as you refine your proposal for private [financing](https://www.offermarket.us/blog/dscr-financing) for real estate loans:

 

* **Maintain Accurate Records:** 
 Regularly update your financial statements and property documents. Accurate records not only simplify the application process but also provide a reliable reference for future evaluations. 

* **Focus on Measurable Data:** 
 Emphasize tangible metrics such as occupancy rates, historical rental income, and market comparables. Data-driven insights lend credibility to your application and help justify your funding request. 

* **Set Realistic Expectations:** 
 Present a balanced view that acknowledges both the strengths and potential challenges of your investment. Avoid overly optimistic projections; instead, rely on conservative estimates that can be validated with historical data. 

* **Be Transparent and Professional:** 
 Your communication should be clear and professional at every stage. Whether it’s the initial application or follow-up correspondence, maintain a tone that is both factual and courteous. This level of professionalism fosters trust with private money lenders. 

* **Plan for Contingencies:** 
 Detail your strategies for managing unforeseen costs or market downturns. A well-thought-out contingency plan demonstrates that you are prepared for all scenarios and helps reassure lenders about the stability of your investment. 

By following these steps, you ensure that your proposal is not only complete but also persuasive. Your methodical approach reflects your commitment to a sound [investment strategy](https://www.offermarket.us/blog/borrower-benefits-dscr#:~:text=term%20investment%20success.-,Integrating%20DSCR%20into%20Your%20Investment%20Strategy,-To%20fully%20benefit).

 

## **Advanced Strategies for Long-Term Success**

 

Once you have mastered the basics, you can incorporate advanced strategies into your financing approach to secure ongoing success in your investments:

 

* **Regular Documentation Updates:** 
 Market conditions and property values evolve. Ensure that your appraisals, rental income forecasts, and maintenance records are updated regularly. This practice keeps your application current and reflects the most accurate data available.

 

* **Establish a Reserve Fund:** 
 Allocate funds specifically for unexpected repairs or temporary declines in rental income. A reserve fund is a critical component of risk management and provides an added layer of security for your investment.

 

* **Plan Future Investments:** 
 Use your current financing experience as a blueprint for future projects. Analyze the performance of your existing property, and adjust your strategies accordingly to maximize returns on upcoming investments.

 

* **Consult with Professionals:** 
 While you manage your own financing, seeking advice from financial advisors or industry experts can provide valuable insights. Their guidance can help refine your strategy and address any gaps in your planning.

 

These advanced strategies not only fortify your current application but also set the stage for future growth. By continuously refining your approach, you position yourself to adapt to market shifts and sustain long-term success.

 

[![Need a DSCR loan, instant quote, takes 1 minute, no credit pull, no obligation](https://cms.offermarket.us/uploads/Need_a_DSCR_loan_2fb5e4b056.jpg)](https://www.offermarket.us/dscr-loan?ref=content-private-financing-for-real-estate-loans)

 

## **Risk Management and Preparing for Market Fluctuations**

 

Every investment carries some degree of risk, and effective risk management is crucial when seeking private financing for [real estate](https://www.offermarket.us/blog/how-to-invest-in-real-estate) loans. Begin by assessing local market trends, economic indicators, and potential challenges that could affect your property’s performance. A thorough understanding of these factors enables you to anticipate obstacles and plan accordingly.

 

Develop clear benchmarks for measuring your investment’s performance. Regular reviews allow you to track progress, make necessary adjustments, and stay proactive in managing potential downturns. Include contingency measures such as reserve funds and insurance policies that protect against unforeseen costs.

 

Your risk management strategy should be comprehensive yet flexible. By planning for both expected and unexpected scenarios, you reassure private money lenders that your investment is safeguarded against market volatility. This foresight not only strengthens your application but also builds confidence in your ability to maintain the property’s performance over time.

 

## **The Impact of Detailed Documentation on Your Success**

 

One of the key factors in securing private financing for real estate loans is the quality of your documentation. Every appraisal, rental history report, and maintenance record plays a significant role in proving the property’s value. Detailed documentation provides clear evidence that supports your investment proposal and convinces private money lenders of your asset’s potential.

 

Organize your records meticulously. Each document should be clearly labeled and updated regularly. This level of organization not only facilitates a smoother review process but also reflects your professionalism and attention to detail. A well-documented application builds trust and significantly enhances your credibility as an investor.

 

Focus on presenting realistic projections supported by historical data. Avoid overly optimistic estimates, and instead, rely on facts and figures that can be verified. This balanced, data-driven approach reinforces the strength of your proposal and provides a reliable basis for funding decisions.

 

## **Maintaining a Long-Term Vision for Your Portfolio**

 

Private financing for real estate loans is not a one-time event; it is an integral part of a broader strategy to build and sustain your investment [portfolio](https://www.offermarket.us/blog/dscr-portfolio-loan). As you secure funding for one project, keep your long-term goals in mind. Every decision—from the quality of your documentation to your risk management plan—should contribute to a strategic vision for growth.

 

Regularly review your portfolio’s performance and adjust your strategies based on current data. Set clear milestones and benchmarks to evaluate the success of each investment. Consider periodic consultations with financial advisors to ensure that your approach remains aligned with your long-term objectives. By maintaining this long-term vision, you not only secure current funding but also lay the groundwork for future success.

 

Patience and persistence are key. Each successful financing experience enhances your reputation as a reliable investor and builds a stronger foundation for future projects. Over time, the cumulative effect of well-managed investments will support sustainable growth and provide you with the resources needed to seize new opportunities.

 

## **Final Thoughts and Next Steps**

 

You have now reviewed a detailed guide on private financing for real estate loans—a strategy that prioritizes the asset’s true value and leverages the support of private money lenders. This guide has provided you with actionable steps for preparing your application, managing risks, and implementing both basic and advanced strategies for success.

 

Every detail of your application, from the clarity of your financial data to the thoroughness of your risk management plan, contributes to a robust proposal that stands out. With careful preparation and a commitment to presenting your investment based on solid, measurable data, you are well positioned to secure favorable financing terms.

 

This guide is intended to be your roadmap to a more flexible and effective funding solution. By focusing on private financing for real estate loans, you take control of your investment strategy and build a resilient portfolio that can weather market fluctuations and seize new opportunities. Your attention to detail, data-driven approach, and long-term vision will serve as the foundation for sustained growth and financial success.

 

## DSCR Loan Quote

 

![DSCR loan quote](https://cms.offermarket.us/uploads/DSCR_loan_quote_c3ae268aed.jpg)

 

Our mission is to help you build wealth through real estate. Let's grow and optimize your rental property portfolio!

 

- Get your instant [DSCR loan quote](https://www.offermarket.us/loans?ref=content-private-financing-for-real-estate-loans) today!
- Save big on premiums with our [landlord insurance rate shopping service](https://www.offermarket.us/insurance?ref=content-private-financing-for-real-estate-loans)!
- Interested in exclusive investment opportunities? [Browse off market properties](https://www.offermarket.us/listings?ref=content-private-financing-for-real-estate-loans) now!
- Join our [Facebook community](https://www.facebook.com/OfferMarketUS) to stay up-to-date with the latest platform updates and market insights.
- Subscribe to our [Youtube channel](https://www.youtube.com/@offermarket) for our monthly DSCR loan update.

Get expert insights on private real estate financing & lenders. Learn proven strategies to secure & grow investments!

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Smart Private Financing for Real Estate Loans

Essential Guide to Private Financing for Real Estate Loans

Grow your real estate investing business with the most competitive DSCR loan product. OfferMarket provides DSCR rental loans, bridge loans, hard money, fix and flip, slow flip, and ground up construction loans.

Private Lending | OfferMarket

Private Lending

What are DSCR loans and how do they work?

Can you get a DSCR loan with no down payment?

DSCR loan liquidity verification

What is the minimum down payment for a DSCR loan?

DSCR Loan Rates by LTV

What are the risks of high LTV DSCR loans?

DSCR loan LTV insights

Other Key DSCR Loan Qualification Criteria:

**Last updated:** April 15, 2024

 

## **What are DSCR loans and how do they work?**

A key differentiating factor of DSCR loans is how qualification is determined. Unlike traditional loans, which primarily evaluate your personal income (W-2, pay stubs, tax returns), DSCR loans are unique because they focus on **the property's cash flow and ability to generate sufficient rental income** to cover the mortgage payments.

**DSCR stands for Debt Service Coverage Ratio**. It is calculated as follows:

DSCR= Gross Rental Income / PITIA (Principal, Interest, Taxes, Insurance, Association fees)DSCR=PITIA (Principal, Interest, Taxes, Insurance, Association fees)Gross Rental Income​.

 

OfferMarket and most DSCR lenders require a **minimum DSCR of at least 1.0**, meaning your property must generate enough monthly rental income to fully cover your monthly mortgage payments. In many cases, lenders prefer a slightly higher DSCR (e.g., **1.1 or 1.2**) for borrowers with lower credit scores or to qualify for more favorable terms and interest rates

 

[![Inforgraphic CTA, instant quote, takes 1 minute, no credit pull, no obligation](https://cms.offermarket.us/uploads/Offer_Market_DSCR_Loan_Program_Overview1920x3240px11_6c42564554.jpg)](https://www.offermarket.us/blog/dscr-calculator?ref=hjinfographiccta)

 

## Can you get a DSCR loan with no down payment?

 

Standard DSCR loan programs, including those offered by OfferMarket, do require a down payment. There are no standard DSCR loan options that offer financing without a down payment. Typically, down payments for DSCR loans range from 20-35%, though the absolute minimum down payment requirement usually falls between 15%-20%. Most institutional lenders, including OfferMarket, cap their maximum LTV at 80% for purchase transactions and 75% for cash-out refinance transactions for borrowers with a credit score of 720 or higher.

 

The largest and most competitive institutional investors who buy DSCR loans consistently enforce these guidelines, requiring borrowers to have “skin in the game” as part of their underwriting approach. This means you’d generally need a minimum down payment of around 20% to qualify for competitive rates and terms.

 

The reason why no down payment loans are not available is because of the risk of negative equity. At 0% down payment, you start with 0% equity in the home. Equity is the difference between market value and loan amount. If the market value of your home goes down, and you need to sell the home, you would need to bring cash to the closing table. This very real risk can be eye-opening with an example.:

 

- Purchase price: $200,000
- Loan amount: $200,000
- Market value after 10% downturn: $180,000
- Equity: -$20,000
- Closing costs to sell: $15,000
- Cash from borrower at settlement: $35,000

 

When the scenario above plays out, many borrowers decide to walk away and let the lender foreclose on the house.

 

A no down payment loan in a rising market can perform well and quickly from from 100% LTV at origination to a safe CLTV (current loan to value). Let's take a look:

 

- Purchase price: $200,000
- Loan amount: $200,000
- Market value after 10% appreciation: $220000
- Equity: $20,000
- Closing costs to sell: $15,000
- Cash to borrower at settlement: $5,000

 

![How to calculate home equity](https://cms.offermarket.us/uploads/How_to_calculate_home_equity_e31ca23b7e.png)

 

When taking on high LTV debt, it's important to understand how your amortization schedule affects that rate at which you accumulate equity in an event your home value does not appreciate. A $200,000 property with a $200,000 loan on amortizing over 30 years will provide you with just $10,765.13 of equity by the end of year 5. A 15 year amortization schedule will provide you with $43,808.16 of equity over the same timeline. The tradeoff, of course, is that the monthly payment will be $455.59 higher in the 15 year amortization schedule.

 

![Monthly Rent Down Payment DSCR](https://cms.offermarket.us/uploads/Monthly_Rent_Down_Payment_DSCR_b00fe6e1ad.png)

 

## DSCR loan liquidity verification

 

For purchase transactions using a DSCR loan, DSCR lenders need to verify that you have enough liquidity to cover the following:

 

- down payment
- closing costs
- 9 months of mortgage payments ("reserves")

 

For liquidity verification, you can provide:

 

- 2 most recent business bank statements, and/or
- 2 most recent personal bank statements, and/or
- 2 most recent brokerage account statements, and/or
- 2 most recent retirement account statements, and/or
- 1031 exchange escrow statement

 

You do not need to move funds from any account and you do not need a business bank account.

 

## What is the minimum down payment for a DSCR loan?

 

While some DSCR lenders may advertise options as low as **15% down (85% LTV)**, this is typically not a competitive or practical scenario for most real estate investors. OfferMarket and similar reputable DSCR lenders maintain that **20-35% down payments** are standard, with the **minimum acceptable down payment typically being 15%-20%** depending on borrower qualifications and property specifics.

Practically speaking, OfferMarket's DSCR guidelines specify clearly defined LTV limits based on your credit score:

* **Up to 80% LTV** for purchase transactions (with minimum 20% down payment) if your credit score is **720 or higher**. 
* **Up to 75% LTV** for cash-out refinance transactions under similar credit conditions. 
* Lower LTV limits (such as **65% maximum LTV for credit scores between 660-679**) apply, requiring a higher down payment or equity contribution for borrowers with lower credit scores.
 

![DSCR Loan Rate By LTV](https://cms.offermarket.us/uploads/DSCR_Loan_Rate_By_LTV_d85b841e50.png)

 

## DSCR Loan Rates by LTV

 
<div style="display: grid; grid-template-columns: repeat(1, minmax(0, 1fr)); overflow: auto; white-space: nowrap;">
<table>
<thead>
 <tr>
 <th>LTV</th>
 <th>Credit Spread</th>
 </tr>
</thead>
<tbody>
 <tr>
 <td>50</td>
 <td>3.25%</td>
 </tr>
 <tr>
 <td>55</td>
 <td>3.3%</td>
 </tr>
 <tr>
 <td>60</td>
 <td>3.35%</td>
 </tr>
 <tr>
 <td>65</td>
 <td>3.375%</td>
 </tr>
 <tr>
 <td>70</td>
 <td>3.4%</td>
 </tr>
 <tr>
 <td>75</td>
 <td>3.5%</td>
 </tr>
 <tr>
 <td>80</td>
 <td>4.0%</td>
 </tr>
</tbody>
</table>
</div>

 

The credit spread in the table above may vary based on DSCR lender, [prepayment penalty](https://www.offermarket.us/real-estate-glossary/prepayment-penalty), number of units of the subject property, and market pricing demanded by investors that buy DSCR loans. 

 

The credit spread is often referred to as the "risk premium" that institutional DSCR loan investors demand to receive above the benchmark "risk free" rate, which is typically the 5 Year US Treasury. Institutions that buy DSCR loans view higher LTV as riskier because the borrower has less equity in the property to provide protection in the event home prices decline and/or the property needs to be sold or foreclosed on.

 

Learn more about [DSCR loan interest rates](https://www.offermarket.us/blog/dscr-loan-interest-rates).

 

## What are the risks of high LTV DSCR loans?

 

💸 negative cash flow -- consistently monthly losses, high financial stress
📉 high default risk -- inability to meet debt obligations
💸 bankruptcy, foreclosure -- personal guarantee required

 

## DSCR loan LTV insights

 

Most DSCR lenders require a [minimum DSCR](https://www.offermarket.us/blog/dscr-calculator) of 1.0. That means the property generates exactly enough rent to pay the monthly mortgage payment (principal, interest, taxes, insurance). If the property requires maintenance or administrative work, that means you'll be losing money.

 

A DSCR of 1.1 means you generate a 10% cash flow margin above your monthly mortgage payment. Borrowers with credit scores of 720 or higher will qualify for the most competitive rate when their rental property has a DSCR of 1.1 or higher.

 

A DSCR of 1.2 means you will generate a 20% cash flow margin and may be required for borrowers with credit scores that are below 720 or 700 (depends on the program).

 

Interest rate directly affects DSCR. The higher the interest rate, the lower the DSCR. In an elevated interest rate environment, in many markets, it is common for the DSCR to be too low at max LTV.

 

<div style="display: grid; grid-template-columns: repeat(1, minmax(0, 1fr)); overflow: auto; white-space: nowrap;">
<table>
<thead>
 <tr>
 <th>DSCR</th>
 <th>Credit score</th>
 <th>Rate</th>
 </tr>
</thead>
<tbody>
 <tr>
 <td>1.0</td>
 <td>700+</td>
 <td>Uncompetitive</td>
 </tr>
 <tr>
 <td>1.1</td>
 <td>720+</td>
 <td>Competitive</td>
 </tr>
 <tr>
 <td>1.2</td>
 <td>680+</td>
 <td>Competitive</td>
 </tr>
</tbody>
</table>
</div>

 

## **Other Key DSCR Loan Qualification Criteria:**

Besides cash flow (DSCR), OfferMarket also evaluates several other important criteria for qualification:

* **Minimum credit score requirement** typically starts at **680**. However, borrowers with scores as low as **660** may still qualify, but with lower LTV limits and potentially higher interest rates. 
* **Liquidity Verification**: You must demonstrate sufficient funds to cover the down payment, closing costs, and typically **9 months of mortgage payment reserves**. Acceptable proof includes recent personal or business bank statements, brokerage accounts, retirement account statements, or 1031 exchange escrow statements. 
* DSCR loans are specifically designed for **non-owner occupied investment properties only**. They must serve a clear business purpose and cannot be used for your primary residence.

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