When it comes to flexible real estate investment financing, few options are as powerful as DSCR loans using SMART VEST. This program is specifically designed for U.S. citizens and permanent residents who want to qualify based on the property’s rental income rather than personal income or employment status. Whether you’re a seasoned landlord or a first-time investor, DSCR loans using SMART VEST provide clear pathways for purchase, rate/term refinance, or cash-out transactions.

Eligible Borrowers for DSCR Loans Using SMART VEST

To qualify for DSCR loans using SMART VEST, borrowers must meet the following:

  • Borrower Type: U.S. Citizens or Permanent Residents
  • First-Time Homebuyers Not Allowed: At least one borrower must have a history of homeownership
  • Housing History: Must reflect a VOM of 0x30x12

Investor History Guidelines

  • First-Time Investors require a 680+ credit score and no landlord experience within the last 3 years
  • Seasoned Landlords with 1+ year of tenant rental experience (verified by mortgage or title) may qualify with scores as low as 660—even if rent-free or not currently owning a primary residence

DSCR Ratio Requirements

The Debt Service Coverage Ratio (DSCR) is critical in qualifying. Here’s what to know for DSCR loans using SMART VEST:

  • Max DSCR 1.0:
    • 85% LTV for Long-Term Rents (LTRs)
    • 80% LTV for Short-Term Rents (STRs)
  • Min DSCR 0.5 (requires 720 score):
    • 75% LTV with LTRs
    • 70% LTV with STRs
  • Interest Only financing is available and qualifies based on IO payment

DSCR = Rents ÷ PITIA. This figure must be manually calculated and entered before submission.

  • AIRDNA Score Note: If the AIRDNA market score is below 60, the minimum DSCR must be 1.0 regardless of LTV

Asset Requirements

  • 2 Months Bank Statements (digital verification OK)
  • Reserves:
    • ≤$1M loan: 6 months
    • $1M–$2M: 9 months
    • No reserves for additional REOs

For R/T refinance loans ≤$650,000, reserves may be waived under favorable conditions.

Gift Funds

  • Allowed for down payment, closing costs, and reserves
  • Over 80% LTV requires 5% borrower contribution
  • Gift donor must be an immediate relative
  • Provide gift letter; if donor wires funds directly to title, no further donor documentation is needed

Subject Property Requirements

  • Appraisal and 1007 rental analysis required for all deals
  • Delayed financing = purchase
  • STRs require AIRDNA report
  • No lease? Provide LOE and use 75% of 1007 rents
  • STRs must have 12-month rent history to qualify, otherwise LTRs are used
  • AIRDNA < 60 = DSCR must meet 1.0

Additional Real Estate Owned (REO)

  • 1003 must list full details (PITIA, occupancy, solar, etc.)
  • Do not enter rents on REO—this will skew DSCR
  • Private mortgages must have VOM if active within last 12 months
  • No supporting documents needed for REOs except subject property

LLC Closings

  • Max 4 members per LLC
  • At least 51% must be credit guarantors
  • Provide full business docs: Articles, Operating Agreement, Tax ID, Good Standing Cert
  • Wet signatures required for LLCs; workaround: disclose in personal names first

Non-Warrantable Condos

  • Must go through Project Review Team
  • Submit condo questionnaire, budget, master insurance, title, appraisal
  • Condotels are eligible

Loan Score Card Requirement

  • Required on all SMART VEST submissions
  • Must achieve PASS before loan can be submitted
  • Common errors: incorrect income, net rents in REO, missing reimport of credit

Required Documents Checklist

  • 90-day valid credit report
  • VOM or alternate housing verification
  • Purchase Contract & Insurance Quote (for purchases)
  • Lease & Payoff Demand (for refinances)
  • 60-day Asset Docs
  • Appraisal 1004 & Rental Analysis 1007 (valid for 120 days)

Foreign National Guidelines (Separate Program)

  • Must live/work abroad and own a primary residence in country of origin
  • 70% Max LTV – Purchase or R/T Refi only
  • No U.S. credit score required
  • Requires 12-month reserves
  • No LLC closings or cash-out allowed
  • Must close in the U.S. with approved title/attorney
  • Delayed Financing is allowed

Final Thoughts on DSCR Loans Using SMART VEST

The DSCR loans using SMART VEST program is a powerful tool for qualifying borrowers based on rental income instead of traditional employment or income docs. Whether your client is investing for the first time or expanding their portfolio, this program delivers the flexibility and structure needed in today’s competitive market.

Let North Star Mortgage Network help you navigate this program with confidence and clarity—Your best interest is my principal concern.

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