Let’s say you want to grow your rental portfolio and decide to shop around for a low rate. You see it all over the place; Google Ads, your inbox, social media, etc. Lenders are offering you rates as low as X% everywhere you look. But what does that actually mean? If you see rates as low as 5.5%, do you qualify for rates as low as 5.5%? The answer is, it depends on the lenders and their qualifications, but, generally speaking, most people will not get the “as low as” rate.
At Visio Lending, our rates are determined by loan-to-value (LTV), Debt Service Coverage Ratio (DSCR), and credit score. So, to get our best rates, you will have to put down 60% or more of the property value, have a DSCR of 1.5 or greater, and a credit score of 740 or higher. That’s not exactly easy to achieve, yet it does happen. Luckily, this June, we have some of our lowest rates ever. If you have top credit, top DSCR, and put down a lot of upfront money, you can get rates in the 5.3-5.8 range. And our rates are in the 5-7 range across the board.
If you want even lower rates with Visio, you have the option to buy them down by paying a higher origination fee. Our standard origination fee is 2%, yet you can pay 3%, 4%, or 5% to buy your rates down in increments of 30 basis points. If your investment strategy is to hold onto your rental portfolio long term, a strategy we have coined “permanent rental” investments, buying down your rate could save you a tremendous amount of money in the long run.
Our goal with this post is to provide context around the industry standard messaging of “rates as low as.” It is always important to reach out to the lender for an exact quote to see how the rate fits in with your investment strategy.