DSCR Loan Connecticut

Last updated: November 20, 2024

Investing in rental properties is an excellent way to build wealth, but securing the right financing can often be a roadblock. For real estate investors in Connecticut looking to grow and optimize their rental property portfolios, Debt Service Coverage Ratio (DSCR) loans offer a powerful financing option. Unlike traditional loans that focus on personal income, DSCR loans evaluate the property's income potential, making them particularly well-suited for rental property investors.

This comprehensive guide will dive into the essentials of DSCR loans, their benefits, the qualification process, and practical tips for leveraging them in your Connecticut rental property strategy.

What are attractive areas in Connecticut?

Connecticut offers a unique blend of charming towns, vibrant cities, and a strong focus on finance and insurance, creating interesting opportunities for potential real estate investors in the rental market. While the overall population growth is projected to be slow and steady, there are notable trends worth considering.

The limited housing supply, especially in single-family homes, keeps rental demand high and can lead to rising rents, particularly in desirable locations near job centers and coastal areas. Despite Connecticut's higher cost of living compared to the national average, it remains more affordable than some major coastal cities, which can influence rental pricing strategies. The state also benefits from a thriving financial sector, with major corporations in finance and insurance headquartered here, ensuring a stable job market for renters.

Hartford Metro Area

Hartford is experiencing slow growth, with an estimated 5,000 new residents expected in the next five years. The local economy is driven by key sectors such as insurance (with companies like The Hartford and Aetna) and healthcare (Hartford Hospital).

• 06103 (Downtown Hartford): This revitalized downtown area features a growing entertainment district and numerous job opportunities. Rents could see moderate increases due to demand from young professionals.
• 06076 (West Hartford): An upscale suburb known for its excellent schools and proximity to major employers. Rents here could see stable growth due to limited housing availability and steady demand from families.
• 06117 (Manchester): A family-friendly area that attracts both young professionals and families. Rents in this neighborhood could see moderate increases due to consistent demand.

Stamford Metro Area

Stamford is experiencing slow but steady growth, with an estimated 3,000 new residents expected in the next five years. The economy is supported by finance (with numerous hedge funds and investment banks) and healthcare (Stamford Health).

• 06901 (Downtown Stamford): A bustling city center offering job opportunities, entertainment options, and a walkable lifestyle. Rents in this area could see moderate to high increases due to consistent demand from young professionals.
• 06902 (Springdale): An upscale neighborhood with excellent schools and proximity to downtown Stamford. Rents here could see stable growth due to limited housing availability and high demand.
• 06890 (Darien): An affluent suburb with a strong school system. Rents in this area could see stable or slight increases due to limited housing availability.

New Haven Area

New Haven is experiencing slow growth, with an estimated 4,000 new residents expected in the next five years. The local economy is bolstered by education (Yale University), healthcare (Yale New Haven Health), and manufacturing (Alexion Pharmaceuticals).

• 06510 (Downtown New Haven): This university town has a mix of students, young professionals, and historic charm. Rents here could see moderate increases due to student demand and revitalization efforts, with fluctuations during academic semesters.
• 06515 (East Rock): A family-friendly area with good schools and proximity to Yale University. Rents in this neighborhood could see stable growth due to steady demand.
• 06470 (Branford): A growing shoreline town that attracts young professionals and families. Rents here could see moderate increases due to rising demand and its proximity to New Haven.

What areas do you do serve in Connecticut?

We work with all properties in Connecticut that have a non-rural designation. Use this rural designation search tool to see if your property is considered rural.

How do DSCR loans work in Connecticut?

The overall process of getting a DSCR Loan in Connecticut is approximately as follows. You submit an application for a loan (you can get started on your loan with an instant quote) answering 14 questions about your property. An instant quote will tell you if you qualify for the loan in under 1 minute of your time. It will also show you the a preliminary interest rate and loan amount. Once you select desired LTV (which can be changed later), your quote will be converted to a Loan File for processing purposes.

You will have to submit documents as part of your Loan File for underwriting. Documents we may ask for will include personal and property documents such as purchase contracts, current leases, borrowing entity documents, deeds, title work (we will engage a title company or an attorney on your behalf to draw up these documents), background and credit reports (that we will order), bank statements for liquidity verification as well as other documents that may be applicable to your specific deal. Full list of requirements can be found here in DSCR loan requirements.

We will also handle all the aspects of scheduling and appraisal for you. Once all the loan documents are submitted, the Loan File goes through underwriting, at which point the underwriting committee may ask for additional documents depending on their discretion. Once the committee receives all the documents and approves the file, closing can be scheduled.

The closing, will be handled by the title company or at the office of closing attorney. Once closing is complete, funds will be wired. Post closing, the loan will be entered into servicing and you will receive information regarding setting up auto-pay or other options that may be available for your loan depending on the specific servicer's capabilities.

Can you lend on properties worth less then $100k?

In short, no, appraisal as is value must come in at above $100,000. We can only lend on properties that are less then $100k if they are in a portfolio with other properties. In order to qualify for our loans, the property must appraise for at least $100,000 as-is at the time of the appraisal, however, total loan amount may be less than $100,000, minimum loan amount is $55,000.

Do you do cash out refi no seasoning for Connecticut loans?

We do offer refinance options with no seasoning requirements. Here is the general criteria for cash out refi no seasoning for Connecticut loans. Easiest way to see if you qualify is to answer a few question in our online quoter. It will compare all of our lending criteria against your answers and give you a response in under 1 minute without you needing to read anything. If in case you want to do it the hard way, please read on to see some of the guidelines below with a full list of our requirements here.

Minimum loan amount has to be above $55,000. Minimum As-Is value on the appraisal has to be $100,000. Between 1-4 units. Must have an active lease with proof of security deposit collected. Property condition must be C4 or better. Minimum credit score of 680. Credit score between 680 to 699, gets maximum LTV of 70%, credit score of 700+ gets maximum LTV of 75%. Max LTC, 100% (less than 90 days seasoning), 140% (90 to 179 days seasoning). Minimum verified rehab, 20% of purchase price (less than 90 days seasoning), n/a (90+ days seasoning). Minimum verified rehab, is an improvement that has been done to the unit to verify increase in as-is value in such as short period of time (less then 90 days) to justify the no seasoning period. Origination fee of 1 to 2 points depending on the loan amount to keep the lights on. Lender fee, $1,995 (doesn't go to OfferMarket), includes multiple fees to several different 3rd party verification services, necessary to certify the information in the Loan File for closing. Appraisal at AMC market price, we also have a promotion that new clients get 100% of their appraisal refunded at closing and 50% refund for existing clients. Time to close, 20-25 days.

I know this is a lot of information. You don't have to lift a finger to calculate any of this to see if you qualify, all you have to do is answer 14 simple questions about your deal and we will tell you if we are a good fit for you and what kind of deal we can offer you. To get an answer on your specific situation, please answer 14 simple questions here in our online quoter for Connecticut DSCR loans.

Do I need to have my property insured to qualify for funding?

Yes, but if you don't already have insurance, we can roll it into the lending process with no extra charge or effort to you. Our insurance team works with thousands of carriers and is intimately familiar with the insurance requirements of your loan. They will be able to ether talk to the agent of your choice or find the most competitive offer without our network of carriers to complement your loan with no extra effort or expense to you. If you already have insurance, you should get an instant quote to see if we can offer you a more competitive rate and save you thousands of dollars over the lifetime of your policy. Get you instant insurance quote here.

What are the best DSCR Lender Connecticut?

There are many DSCR lenders in Connecticut and you have many options to get your loan funded. As fellow rental property investors, we built OfferMarket to be a low cost DSCR lender. We believe you should never have to wonder if you're getting the best possible terms from your lender. You should never need to waste time negotiating. That's why we provide you with our best possible term sheet every single time -- you get our lowest rate and lowest fees.

Your first loan with OfferMarket is the start of a long term relationship. It's our opportunity to provide you with remarkable value and prove that we deserve to be your partner on your real estate investing journey. We feel a sense of obligation to prove we deserve your business on each and every loan.

Are you able to lend on rural properties?

We can't lend on rural properties. How can I find out, if my property is rural? Here are more detail on how to verify if your property is rural in our Rural Designation Search Tools. The 2 search tools are hosted by USDA Rural Development Property Eligibility and CFPB Rural and Underserved Areas Checker. Both of the tools must flag the property as none rural for it to be eligible for our funding. Use these instruction to find out if your property is considered rural

What are the requirements for a DSCR loan in Connecticut?

If you scroll up on this page, you will see a simple checklist that details high level requirements for our DSCR loans in Connecticut. If you want a more detailed quote for your specific deal, click "start" next to "apply for a DSCR loan" and our online quoting system will produce an accurate quote based on 14 questions related to your deal. Most investors are able to get a complete quote in under a minute because those 14 questions most investors will know answers to. Our most detailed DSCR Loan Requirements can be found here. Once you complete an online quote, you can proceed to your Loan File, where you can peruse the Loan Terms which will detail all the fees and proceeds of the loan in one convenient interface. Get an instant loan quote and Loan File

Otherwise, you can read on to see common guideline breakdowns:

Credit Score

In most cases, a 720 credit score will qualify you for the lowest interest rate and highest loan amount. We recommend protecting your credit score and striving for a 740+ score to make sure you get the best terms.

No Seasoning

Most DSCR lenders require 6 months of seasoning. At OfferMarket, we have a no seasoning program for qualified borrowers. We also offer 90 day (3 month) seasoning for borrowers with 700+ credit score or 5+ rental experience.

Rural Properties

Rural properties are not a good fit for DSCR loan programs. If your property is considered rural in any of the following ways, it may not be eligible:

• Rural designation by Federal Government (CFPB, USDA)
• Rural designation by appraiser
• Population under 10,000
• 5+ miles from a 100,000+ population center

Rural designation is a gray area so we recommend proceeding with caution on any purchase where the subject property checks one or more of the above bullets. We can't lend on rural properties. How can I find out, if my property is rural? Here are more detail on how to verify if your property is rural in our Rural Designation Search Tools. The 2 search tools are hosted by USDA Rural Development Property Eligibility and CFPB Rural and Underserved Areas Checker. Both of the tools must flag the property as not rural for it to be eligible for our funding. Use these instruction to find out if your property is considered rural

Full list of requirements can be found here in DSCR loan requirements.

How to get a DSCR Loan in Connecticut?

The easiest way to start your Connecticut DSCR loan is to click the start button next to "apply for DSCR loan" banners at the top or bottom of this page. OfferMarket's team has expansive experience working with real estate investors across Connecticut.

What are the requirements for a DSCR loan in Connecticut?

If you scroll up on this page, you will see a simple checklist that details high level requirements for our DSCR loans in Connecticut. If you want a more detailed quote for your specific deal, click "start" next to "apply for a DSCR loan" and our online quoting system will produce an accurate quote based on 14 questions related to your deal. Most investors are able to get a complete quote in under a minute because those 14 questions most investors will know answers to. Our most detailed DSCR Loan Requirements can be found here. Once you complete an online quote, you can proceed to your Loan File, where you can peruse the Loan Terms which will detail all the fees and proceeds of the loan in one convenient interface. Get an instant loan quote and Loan File

Why use Connecticut DSCR Loans to buy investment properties?

DSCR (debt-service coverage ratio) loans can help real estate investors shorten their cash cycle and grow their rental portfolios more rapidly in a few key ways. First, the higher leverage and lower down payments allowed by DSCR loans mean investors can acquire more properties with the same amount of cash on hand, rather than tying it all up in larger down payments. Additionally, the option for interest-only payments creates more positive cash flow that can be reinvested into new property acquisitions. Finally, DSCR underwriting based solely on the rental income of the property itself, rather than the investor's personal income, enables investors to scale their portfolios more quickly without running into debt-to-income ratio restrictions.