Requested Documents

We will request documents only after you have (1) received a Loan Estimate and a Home Loan Toolkit, and (2) you have provided us with your verbal or written “intent to proceed” with the mortgage application. Before receiving the requested documents we may ask you to provide us with Information that will help us to evaluate your potential application for a mortgage loan.

The following documents may be requested to obtain new mortgage loan:

Past two (2) years W-2 statements
Pay Stubs covering the last (30) thirty days
Two most recent monthly bank statements
Most recent transaction summary of 401K, IRA, or Mutual Fund Accounts
Photocopies of any stocks or certificates of deposits
A letter of explanation for any known credit problems
If you are currently renting….either 12 months canceled rent checks or the name and address of your current landlord

Also, the following documentation is also generally required.

For a refinance:

A copy of the deed, and most recent tax bill

For a Purchase:

A signed purchase contract
Realtor contact information
Condo Association contact information.

For a VA Loan:

DD Form 214 (Long Form)

If you are divorced:

A fully executed divorce decree

If you are self employed, employed in sales, paid by commission,or own rental real estate:

Two (2) years signed personal tax returns – including all schedules
If self-employed through a corporation, last two years corporate returns as well as a year-to-date profit and loss statement and balance sheet

Different programs require varying amounts of documentation. The loan program you select may require more or less documentation. Please contact us for a free, no-obligation consultation.

DSCR Loans

The following is a brief checklist of the documents that you will be expected to provide when going through the process of obtaining a DSCR loan. It is important to remember that DSCR lenders are all following the 100% exact same guidelines and requirements, such as conventional lenders originating Fannie Mae-qualified loans.

DSCR lenders typically have mostly the same guidelines, but each are a private lender and has differences. Additionally, not all DSCR loans will have the exact same document requirements based on the deal itself and won’t be applicable. Some examples of this are “entity” documents, which are only required if the loan is taken in the name of an entity, like an LLC.

Application

The DSCR Loan process typically starts with the application. Some DSCR lenders will use the standard Fannie Mae Form 1003 application. However, this is designed for conventional loans (including normal owner-occupied loans) and includes lots of questions and information not required by DSCR lenders.

Several DSCR lenders, especially ones focused solely on DSCR loans and financing real estate investors, will have customized applications that have questions and fields only specifically needed for DSCR loan qualification. These custom-built applications are typically a few pages and take approximately 15 minutes to complete.

Typical items included are questions about the property, real estate investing experience, financial profile, the entity (if borrowing through an LLC), and optional demographic information.

While all of this information will be checked and verified during the underwriting process, and rough estimates are generally OK, it is very important to be truthful on the application. As a DSCR lender finding evidence of misstatements on the application later in the process can have serious consequences.

Credit authorization

This document authorizes the DSCR lender to pull a credit report for the guarantors on the loan. Note that mortgage lenders use a slightly different credit report with a focus on other real estate debt history than others, so your score with a DSCR lender may be slightly different from what you would find in other places.

Bank statements

Generally, DSCR lenders will require two months of bank statements to prove minimal liquid asset “reserves,” generally in the amount of three to six months of PITIA payments. While these loans must be used for business purposes, it is perfectly fine and acceptable for the individual borrower to pay debt service from personal funds if needed. This can occur if the property experiences vacancy or turnover or maybe is a short-term rental in a seasonal market, and some months bring in light amounts. The liquid asset reserves provide a “cushion” for these cases.

Most DSCR lenders will also allow for retirement accounts or stock and bond portfolios to satisfy this requirement, often with a 20% or so “haircut” of the amount to account for the lower liquidity and value risk.

Property insurance

DSCR lenders will require that the property is properly insured against potential damage and destruction, typically at a minimum of the loan amount or replacement cost. This ensures that if the property is destroyed, the DSCR lender can recover the funds from the loan in a payout of no less than the principal balance. Flood insurance to this amount is also required if the property lies in a federally designated flood zone.

Leases

If the property is leased as a long-term rental, copies of the leases are required to be provided, and they must be in proper order (clearly signed with rents and terms fully clarified). One thing to watch out for is when purchasing a property that is currently leased out: things typically run the smoothest when the seller can provide these leases quickly.

Short-term rental history

If the property has been utilized as a short-term rental, the last 12 months of bookings and receipts are typically required by the DSCR lender. Usually, these can be downloaded and sent fairly easily from short-term rental platforms such as Airbnb and VRBO.

Entity documents

These are not applicable if you are borrowing as an individual but are required if, like many investors, you choose to set up an LLC. For borrowers who go this route, a few documents are typically required. It will often depend on the state of incorporation.

Typical entity documents required by DSCR lenders include:

Certificates of Good Standing

Certificate of Formation

Articles of Organization

Operating Agreement

Renovation documentation

For borrowers who follow the BRRRR method and use DSCR loans for a quick cash-out refinance, documentation of all the renovation work is often required. These will typically include receipts, invoices, and work orders from the rehab work on the property.

Conclusion

While there are a few more documents that go into the loan file, these are obtained by the DSCR lender and don’t have to be provided by the borrower. These include an appraisal, appraisal review, and title insurance.

Overall, DSCR loans are a great product because the documentation requirements are limited and reasonable, ensuring solid underwriting and protecting against risk and market meltdown while not being a hassle and nightmare of paperwork.