In this episode of the Private Lending Insights Podcast, I interviewed Dave Orloff, CEO of American Heritage Lending for an in-depth discussion on DSCR (Debt Service Coverage Ratio) loans. They explore current market trends in mid-2025, interest rate volatility, updated loan guidelines, and what makes AHL’s DSCR program stand out — including high LTV options, 40-year loan terms, fee stacking, and their approach to short-term rentals and multifamily properties. Whether you’re a broker, investor, or lender, this episode offers practical insights into one of the most popular loan products in private mortgage lending today. Watch the video, listen to the audio, or read the summary below.
Interview Summary
In this episode of Private Lending Insights, host Rocky Butani welcomes back Dave Orloff, CEO at American Heritage Lending (AHL), to explore everything investors and brokers need to know about DSCR (Debt Service Coverage Ratio) loans in 2025.
The interview opens with market updates since their last conversation in December. Dave discusses how the early months of 2025 were impacted by post-election uncertainty, leading to a temporary slowdown in lending activity. However, he notes that demand has remained strong, delinquencies are low, and investor appetite for DSCR loans continues to grow.
The conversation shifts to interest rate volatility, where Dave shares how quickly rates can shift — sometimes even intraday — and how AHL navigates these swings in the capital markets. He also touches on recent pricing trends, noting a gradual increase in average rates from the 6% range into the 7% range, while emphasizing the importance of maintaining affordability for borrowers.
Rocky and Dave then dive deep into DSCR loan guidelines. Dave highlights how AHL has expanded its program to allow up to 85% LTV on purchases, provided the borrower has a strong credit score and a high DSCR ratio (typically above 1.25). He also confirms that standard max LTVs remain at 80% for purchases and 75% for cash-outs, with minimum FICO scores starting at 680, though AHL considers exceptions on a case-by-case basis.
A major highlight of the interview is AHL’s recent launch of a 5–10 unit multifamily DSCR program, expanding their reach beyond traditional 1–4 unit investment properties. Dave explains how this new offering addresses a gap in the market and gives small-to-mid-sized multifamily investors more flexible options.
The discussion also covers DSCR calculation fundamentals, emphasizing the role of rental income versus monthly expenses (PITI + HOA), and why exact numbers are often hard to determine without knowing the final interest rate — which AHL can help estimate using its DSCR calculator.
Dave also introduces AHL’s 40-year DSCR loan, featuring 10 years of interest-only payments followed by 30 years of amortization — ideal for investors looking to maximize cash flow. He acknowledges that while some prefer traditional 30-year terms for equity-building, others favor longer terms for immediate income. AHL offers both options to suit different investment philosophies.
Other key topics
- Fee stacking: AHL allows borrowers to finance discount points and broker fees into the loan amount to reduce out-of-pocket expenses.
- Rate locks: AHL offers a 45-day rate lock, protecting borrowers from rate hikes during processing.
- Float-downs: While not guaranteed, AHL reviews requests on a case-by-case basis when market rates drop.
- Entity structure: If an LLC has multiple members, AHL underwrites all 25%+ owners and uses the highest FICO for pricing.
- Short-term rentals (STRs): AHL supports DSCR loans for vacation rentals, but borrowers must have at least 12 months of STR experience.
- Rural property eligibility: AHL uses multiple tools — including MSA population, Google Maps, and CFPB’s rural lookup — to assess whether a property is too rural. The general rule is minimum city populations of 10,000 and no dirt roads or uncomparable areas.
- Acreage limits: AHL typically caps at 5 acres, though exceptions can be made with strong compensating factors.
- Prepayment penalties: Multiple options are available, from 5-year step-downs (5-4-3-2-1) to 1-year prepaid options with slightly higher rates, depending on the borrower’s exit strategy.
The episode wraps up with Rocky noting that they didn’t have time to dive into AHL’s popular wholesale lending program, which will be the focus of a follow-up episode with Dave in the coming weeks.
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