FREQUENTLY ASKED QUESTIONS (FAQS) ABOUT REAL ESTATE INVESTOR FINANCING
What is Belcanto Capital?
We offer real estate loans designed for professional real estate investors. This translate to streamlined, low-doc processes, excellent terms, and investor-friendly service and communication for any and all kinds of short-term bridge and long-term DSCR-style loan structures.
How are fix and flip loans structured?
We can securing financing up to 90% (and even 100% in select cases with our market-leading program) of the purchase price of the to-be-renovated property as well as 100% of rehab costs (available in periodic draws post expenditure) These are one-year loans at interest-only but are typically finished within 3-6 months (no prepayment penalty) with a sale of the property (flip) or a refinance of it (hold).
What is the difference between a DSCR loan and a regular loan?
A DSCR loan — short for debt service coverage loan — is a mortgage designed for real estate investors to help them purchase investment properties. Whereas traditional mortgage lenders (e.g. banks) review your income and/or employment to determine your eligibility for credit, DSCR lenders instead look at the investment property’s cash flow performance.
What is a good DSCR ratio?
Most real estate loans require a DSCR ratio higher than 1.00 and some may even require at least 1.25. Our DSCR ratio requirement is 1.10 on 1-4 unit property (as well as a portfolio loan) and 1.20 on a multifamily property.
What kind of documentation is required for a DSCR loan?
Instead of documentation about the borrower, e.g. income verification, employment verification, tax returns, etc, the loan is based on the value/cash flow of the property. This leads to an appraisal of the property as the basis of the loan. The borrower credit is checked to confirm likelihood of debt repayment.
Is there a minimum credit score required for your real estate loans?
There is no credit minimum for fix and flip loans as well as ground up construction projects. For 1-4 unit loans, the minimum FICO (mid-score) is 660 and for 5+ units the minimum is 680.
Is a business entity required for your loans?
No, but it is recommended.
What are your minimum loan amounts?
$50,000 for fix and flip/ground up construction projects, $75,000 for purchase/refinance of 1-4 unit properties, $150,000 for portfolio loans, $250,000 for purchase/refinance of 5+ unit properties, and $500,000 for multifamily bridge loans.
What is the difference between a rate-term refinance and a cash-out refinance?
A rate-term is meant to replace the current loan amount (usually short-term related to a finished rehab project) with a new loan at the same amount with better terms (i.e. a long-term rental rate). A cash-out refinance can involve a property owned free and clear (no loan balance) or one with a smaller loan balance where the new loan is higher than the current loan balance such that the borrower gets at least $2000 back at closing (usually a lot more). A cash-out refinance will have a higher rate than a rate-term refinance and will be limited to 75% LTV (rate-term refinance can go to 80% LTV).
What are max LTV amounts on your loans?
For 1-4 unit properties, it is 80% for on a purchase and a rate/term refinance and 75% on cash-out refinances as long as the credit score is above 740. For scores below, the LTV amounts decline to 65%/60% at credit between 660-679.
What are your seasoning requirements on a refinance?
The seasoning rules (i.e. how long you have owned the property in order to refinance) can vary but in general it is:
- 3-6 months: you can get 140% of your costs (purchase price + rehab) as the new loan amount, up to 70% ARV
- 6+ months: you can get up to 75% ARV as the new loan amount
In other words, you can replace your hard money loan with a similar or even somewhat higher loan amount at the 3-month mark. To get a true ARV-based loan amount, and thus potentially a large cash-out amount, you would need to wait until the 6-month mark (exceptions apply to allow the 3-month mark in cases)
Do you offer interest-only on long-term DSCR loans?
Yes, at 5, 7, or 10 years (e.g. 10 years on a 30-year fixed rate mortgage).
Is previous experience required for fix and flip loans?
No, all levels are considered. However, it is possible that less than 85% LTC will be funded.
Ready to get started?
Let’s discuss your specific project scenario