DSCR Insider — NEXA Lending

DSCR Pre-Approval Checklist

Jermaine Fields · NMLS #2067609 · Licensed in CA & MO

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1
Complete Loan Application
Review line by line with all applicants on the phone
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DSCR Focus DSCR loans qualify on the property, not the borrower's income. Confirm upfront: is this a 1–4 unit residential, 5+ unit commercial, or short-term rental (STR/Airbnb)? That determines which lender matrix applies. Ask for the address and current/projected monthly rent immediately.
Application Checklist
  • Borrower name, SSN, DOB confirmed on application
  • Subject property address confirmed (purchase) or current property address (refi)
  • Property type confirmed: SFR / 2–4 unit / 5+ unit / STR
  • Projected monthly rent obtained (or existing lease amount)
  • Purchase price or estimated value confirmed
  • Down payment source identified (own funds / gift / 1031 exchange)
  • Vesting confirmed: individual name or entity/LLC ENTITY
  • All applicants on call during review — confirmed
2
Send Upfront Compliance Documents
E-signature required before credit pull
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NEXA Compliance — Required on Every File Generate all docs from Lending Pad → Forms. NEXA Privacy Policy must be NEXA's version (not lender's). State-specific MLOA required for CA and MO — do not use standard MLOA for your loans.
DSCR Additional Requirement Pre-payment Agreement is required on all DSCR loans. Add this to the upfront package.
Standard Docs — All Loans
  • Borrower's Authorization / Cert & Auth — borrower signed & dated
  • NEXA Privacy Policy — borrower AND LO signed & dated
  • State-Specific MLOA (CA or MO) — borrower AND LO signed & dated CA · MO
  • Lender Initial 1003 — borrower AND LO signed & dated
  • Lender Initial Loan Estimate — borrower signed & dated (or acknowledgement of receipt)
  • Pre-Payment Agreement — borrower signed & dated DSCR
CA-Only Additional Docs CA
  • Fair Lending Notice (Housing Financial Discrimination Act of 1977)
  • CA Fair Appraisals Notice
MO-Only Additional Docs MO
  • Missouri Loan Brokerage Disclosure and Agreement (Mo. Rev. Stat. §443.867) — issued at application
Upload All to Lending Pad
  • All upfront docs uploaded to Lending Pad file — confirmed
3
Pull Credit Report
Authorization documented before pulling — no exceptions
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Compliance — Non-Negotiable Verbal authorization must be documented. Click the authorization box on the credit company's website AND add documentation to the Lending Pad file before pulling. Never pull credit for yourself or your spouse.
DSCR Credit Guidelines Most DSCR lenders require 680+ middle score for best pricing. Some programs go to 660 or 640 with LTV adjustments. A few go to 620. Run the deal — even a 640 score can work with the right lender and strong DSCR ratio. If score is borderline, ask if credit optimization is possible before pulling.
Before You Pull
  • Consumer authorization documented: e-consent / email or text (date & time stamped) / payment / Cert & Auth in Lending Pad
  • Authorization documentation uploaded to Lending Pad file
  • Credit pulled — note all three bureau scores
  • Middle score confirmed (used for pricing, not high or low)
  • Credit report reviewed — note any collections, late pays, or derogatory items that affect DSCR lender eligibility
4
Structure the Loan
Run the DSCR math — pick the right lender matrix
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DSCR Formula DSCR = Monthly Gross Rent ÷ PITIA (Principal + Interest + Taxes + Insurance + HOA). Most lenders require 1.0+ (breakeven). Premium pricing typically at 1.25+. No-Ratio DSCR products exist for deals where ratio doesn't qualify — ask lender AE. STR/Airbnb: use AirDNA market rent or executed lease, depending on lender.
DSCR Math
  • Monthly gross rent obtained / confirmed (existing lease or market rent estimate)
  • PITIA calculated: P+I at target rate + taxes (from county records) + insurance quote + HOA (if applicable)
  • DSCR ratio calculated: Rent ÷ PITIA = ____
  • If DSCR < 1.0: explored no-ratio product / larger down / different property
Lender Selection
  • LTV confirmed: purchase (down payment %) or refi (current value vs. loan amount)
  • Lender selected based on: credit score tier, LTV, property type, DSCR ratio, state (CA/MO)
  • Lender-paid compensation confirmed with AE before locking
  • Loan options presented to borrower — rate, term, prepay options explained
5
Run Initial AUS / Lender Submission
DSCR loans use lender-proprietary systems, not DU/LP
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DSCR Underwriting Note DSCR loans are NOT run through Fannie DU or Freddie LP. Each lender has their own DSCR calculator and pricing matrix. Submit directly to the lender's broker portal (or via NEXA's wholesale channel) and review their conditional approval / scenario output for exact conditions.
  • Lender portal login confirmed (NEXA wholesale channel)
  • Scenario / pricing run in lender portal
  • Conditional approval / findings reviewed — exact conditions documented
  • Rate locked or float decision made with borrower
6
Request Supporting Documents
Think 5 steps ahead — no surprises during underwriting
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DSCR Advantage No tax returns. No pay stubs. No W-2s. DSCR qualifies on property cash flow only. The doc list is shorter than conventional — use this as a selling point. Focus on: the lease/rent, the property docs, and reserves.
Standard DSCR Docs
  • Photo ID (government-issued) — all borrowers
  • Executed lease agreement OR market rent letter / Form 1007 (appraiser rent schedule)
  • Bank statements for reserves: typically 6 months PITIA in verified assets
  • Down payment source documented (bank statements showing funds)
  • Homeowners insurance quote (or binder if existing property)
  • HOA documentation if applicable (dues amount, contact info)
Purchase Only PURCHASE
  • Fully executed purchase contract
  • Earnest money deposit confirmation
Entity / LLC Purchase ENTITY
  • Articles of Organization / Articles of Incorporation
  • Operating Agreement
  • EIN confirmation letter
  • Certificate of Good Standing (from state of formation)
Borrower Instruction
  • Borrower told: DO NOT move money around during loan process
  • Borrower told: DO NOT open new credit accounts or make large purchases
7
Review Submitted Documents
Verify docs match what the borrower told you verbally
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DSCR Review Focus The lease amount is the linchpin. Verify the lease rent matches — or exceeds — what was used to calculate the DSCR ratio. If actual lease is lower than projected, recalculate immediately before going further.
  • Lease/rent amount on docs matches DSCR calculation used — confirmed
  • Bank statements show sufficient reserves (6 months PITIA minimum)
  • Down payment funds are seasoned (typically 60+ days in account)
  • No large unexplained deposits in bank statements
  • Entity docs are current and match borrower vesting — confirmed
  • All docs match verbal application info — no discrepancies
8
Reassess Loan Details
Strip it down — loans are pass or fail, not graded
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DSCR Pass/Fail Logic The three gates: (1) DSCR ratio meets lender minimum, (2) LTV within lender guidelines, (3) credit score meets tier. If all three pass — it's a deal. Don't add unnecessary docs or complicate the file. Remove anything not needed to close.
  • DSCR ratio recalculated with actual docs — still passes lender minimum
  • LTV confirmed within lender guidelines (typically ≤75–80% for DSCR)
  • Credit score tier confirmed — matches lender pricing matrix
  • Unnecessary income or asset accounts removed from application
  • File is as clean and simple as possible — confirmed
9
Re-Run / Confirm Lender Eligibility
Confirm approval status with updated information
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  • Lender portal re-run with final figures — approval confirmed
  • Final DSCR ratio verified: ____
  • Final LTV verified: ____%
  • All lender conditions from initial review are addressed
  • Rate/program confirmed — no pricing changes since initial run
10
Issue Pre-Approval / Submit to Processing
Push the loan — fill out the processing form for Judy
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NEXA Compliance Reminder Pre-approval letter must include: your name, NMLS #2067609, NEXA Lending, NMLS #1660690, "Licensed in CA and MO only", Equal Housing Lender. Never quote a specific rate in the pre-approval letter.
  • Formal pre-approval letter issued to borrower — compliant with all NEXA disclosure requirements
  • Processing form completed for Judy
  • Complete loan file submitted to processing
  • All upfront compliance docs confirmed uploaded to Lending Pad
  • Borrower follow-up call scheduled — set expectations for next steps and timeline