DSCR & Non-QM for Real Estate Investors — Bank Statement & P&L Loans Explained (Approval by Cash Flow)

Anthony DiToma (00:00)

Yeah, listen, in our industry, it’s easy to look at a loan number attached to an email line and go down a rabbit hole of production and volume and forget the personal side of it, right? And years ago, it became very obvious to me that a house is more than a house. It’s a home to somebody. And more than a home,

It is the single greatest vehicle for wealth creation in the entire country. Okay? I’ve spent my entire 20 year career ⁓ getting people into homes quickly and painlessly and then showing them how to utilize the appreciation in that home for future wealth creation, right? How to consolidate debt, how to utilize equity products, for investments in ⁓ other businesses or in additional real estate, right?

Kristen Knapp (02:36)

Welcome back to the Real Estate Pros podcast. I’m Kristen and I’m here with Anthony DiToma, is the Senior Loan Officer of Supreme Lending. They are a nationwide top 20 mortgage lender and they function out of all 50 states. So I’m excited to get into this. Thanks for being here, Anthony DiToma. So I want to get into, know, you have such good experience and knowledge of the market and kind of the nuances within it that maybe people don’t know about, but I want to start at the beginning. How did you kind of get into this line of work?

Anthony DiToma (02:51)

Thanks for having me.

You know, ⁓ like so many loan officers or so many salespeople, it wasn’t really a direct goal ⁓ in a straight line for me. I was introduced to the mortgage industry in two ways, predominantly because it’s a family business. My sister had been in mortgages ⁓ back in Arizona for years. Her husband runs his own broker shop. So it was an industry that I was familiar with.

but it ended up being a coworker at a previous job I held that said, hey, you should really look into this whole mortgage thing. They’re killing it. That was way back in 2006. I ⁓ took the plunge, jumped in, and boy, I was not prepared at all for the ensuing fall of 2007.

Kristen Knapp (03:42)

Wow.

For 2018. Yeah.

What was that like? What was that like being on your side of the business?

Anthony DiToma (03:59)

You

know, it was a ⁓ very confusing time for us. It was heartbreaking. ⁓ Just sitting there watching your friends and colleagues kind of get walked out by security as the layoffs rolled through, not just our company, but ⁓ hundreds of mortgage lenders throughout the nation. It was daily news, you know, hearing which was the next lender to fall.

⁓ in the Domino line, but the truth of the matter is my colleagues and I had been sitting there talking to our borrowers in the run up to the 07 mortgage crisis and honestly hearing the loans that other lenders were doing, right? ⁓ We were doing non-prime paper, which is credit scores below 620, so that presented its own set of challenges, but…

Clients were getting offers from lenders nationwide at the time that were offering them 100 or even some cases, 120 % of their current home value as a cash out refi, right? Thinking that the home values were gonna continue to rise indefinitely and that just clearly was a flawed piece of logic from the start. So we knew that it was kind of rocky ground we were sitting on back then. And when the dominoes started to fall,

Kristen Knapp (05:07)

Bye.

Anthony DiToma (05:25)

We knew it was going to be bad.

Kristen Knapp (06:15)

Yeah, I mean, that’s so devastating. That was such a devastating time for the industry. When did you, you when things started to kind of even just even out, not necessarily even upswing, how did that feel? How did you kind of, because I’m sure it was hard to even build a client base and a strategy when you’re entering, you know, essentially your career right when the industry collapses.

Anthony DiToma (06:39)

Right,

no, it’s a great question. And I think my lack of experience in the industry leading up to that point was probably one of the things that saved me because I didn’t lose all of the clients that so many people lost, right? And then the industry just shifted in such a dramatic way regarding homes and mortgages and the government’s ability to step in and lend a hand. ⁓ The big term in the mortgage lending space back then

was a product called the DU ReFi Plus. And that was basically the government stepping in and offering assistance to refinance loans, even when they were underwater, ⁓ and give people access to lower interest rates and give them some reprieve. So we found a way to plow through, but it certainly shifted the industry ⁓ in a really dramatic way, which is why I get

Kristen Knapp (07:34)

Yeah.

Anthony DiToma (07:38)

I start to pull my hair out when I hear some of these really fantastic clickbait stories coming out of the media about how we’re on the doorstep of another 07 housing market right now. I just don’t see it in the data.

Kristen Knapp (07:52)

Yeah, talk more about that, kind of where we’re at in the industry and what you see.

Anthony DiToma (07:57)

Yeah, where we’re at in the industry is having just gotten out of a pandemic where we saw record run-ups in home values, home prices appreciating at five or 7 % year over year for three, four years straight, right? And so everybody was used to their home values climbing quite substantially and very quickly too, right? But the part that…

The other part of that same coin, the flip side of that same coin that nobody talks about is why home values were running up that quickly. And the answer was simply supply and demand. There was nobody who was willing to put their house on the market. And so inventory dropped to a level where there were so few houses active and on the market for sale that they had 10, 15, 20 offers from buyers on day one. Right. So we’ve gotten out of that market as people have

become more comfortable with the idea of selling their existing home, inventory now, just as of May, 2025, finally got back to pre-pandemic levels, okay? So in the past five years, we have now just gotten back to the levels of available homes for sale before COVID hit. So now we’re seeing a little bit of quieting down of that year over year appreciation, but still,

forecasted growth in the vast majority of markets nationwide, maybe just 1 to 2 % growth as opposed to 5 or 7%. So that’s the market we’re in. Maybe we’ll see some additional price drops as people realize that they can’t be so aggressive in their initial list price. But those price drops are different than a housing crash, which is kind of that

that clickbait stuff that I was referencing earlier.

Kristen Knapp (09:59)

Yeah, absolutely. And kind of looking ahead, are you optimistic about, you know, what’s to come with, you know, interest rates and all that?

Anthony DiToma (10:43)

I really am for a couple of reasons. Number one, ⁓ I’ve been telling my realtors and referral partners for years. I’ve literally got hundreds and hundreds of pre-approved buyers that are ready. And they’re pre-approved, they’re ready to go. And every single time I check in with them, the conversation is, thanks for the update, Anthony. Let me know when rates get down to five and a half.

Kristen Knapp (10:58)

Right.

Anthony DiToma (11:08)

or whatever their particular number is, because it’s a different number for everybody. But studies have shown that literally 80 % of home buyers, potential home buyers, have said that they are waiting for rates to come down before they pull the trigger. So we’ve got this deep bench of potential buyers just waiting for rates to get down to a level that will help with affordability. ⁓

Kristen Knapp (11:34)

Yeah.

Anthony DiToma (11:36)

That’s, think, is so exciting about our, that’s what makes me so hopeful about this stage of the market we are at. The other thing is, selfishly, us in the lending community, we have seen the rolls of active licensed loan officers nationwide drop from over 300,000 in 2022, 2021, to

about 80,000, okay? So our entire industry has really shrunk. And I truly believe that it’s the lenders that are providing the best service and the most value to their referral partners and to their clients that have survived this thus far.

Kristen Knapp (12:06)

Wow.

Why has it shrunk so much just from the changing market?

Anthony DiToma (12:27)

Yeah, I mean the the number of loans being done both on purchase and on the refi side has dwindled during this high rate environment we’ve been in for the last three years that it simply doesn’t justify a a 300,000 strong employment sector in the lending community, right? And so the ones that have survived I believe are the ones that

truly have the experience, the tools, and the ability to show up and ⁓ get a client squared away in a very seamless type of process.

Kristen Knapp (13:07)

Yeah, absolutely. That’s so interesting. mean, for the industry, but that’s very interesting to hear. And it’s also interesting, I I’ve heard that from a couple of people, that there is like a ⁓ deep network of buyers that are just waiting for rates to drop. ⁓ I mean, there’s no perfect market. I think that if you’re somebody who wants to get into the market, this isn’t a bad time to get in, do you think? Because there’s going to be competition later.

Anthony DiToma (13:36)

Yeah, absolutely. And that’s a tough lesson to try and convey to buyers who aren’t necessarily as dialed into the inner workings of real estate markets and the ebb and flow that we see on a constant basis with production. So a lot of times we’ll get no from the buyer at an interest rate that’s been at 7 % for the past three years. But call me when rates go down.

And then that parlays into a second type of conversation that we have commonly with borrowers that say, okay, I’m glad rates are falling, but I don’t think I, I want to see them fall a little bit further. Let’s see how far they go. And so often in the past, we’ve been burned and we’ve had clients that were burned who thought we were on the precipice of a really significant rate drop only to have the rug pulled out from under us by the Fed or some

Kristen Knapp (14:19)

Yeah.

Anthony DiToma (14:33)

really strong economic data that kind of caused the market to pull back. So to your point, the conversations I’m having with my clients every day are to try and educate them. Let’s get your file ready, let’s get you pre-approved so you’re green light, you’re ready to go. And then once you’re ready to pull the trigger, all I have to do is click a button and we’re off and running sort of thing, right? Because to your point,

In the past three months when mortgage rates dropped almost a full percent, right, from seven down to six and a quarter or just above six, we already saw our phones start to ring more in the lending community. ⁓ New applications for home purchases and new applications for refinances started to spike. The phones start to ring and you start to feel the groundswell ⁓ come about as word gets out on the street and home…

homeowners as well as potential buyers start to get the news that rates are dropping. But the longer, or I should say the more rates do come down, the more people that are gonna come back in off the sidelines, it’s going to generate another crunch in that supply and demand issue that we just talked about.

Kristen Knapp (16:30)

Interesting. And I would love for you to talk about non-qualified mortgages and kind of this growing part of your business.

Anthony DiToma (16:40)

Yeah, yeah, non-qualified mortgages or non-QM loans as we refer to them are really something relatively new to the mortgage space, right? They were rolled out in 2014, 2015 as a result of legislation handed down from Congress that basically told all lenders in the United States, if you’re gonna do a mortgage for a home buyer, you need to validate certain ways in which you are…

proving that they have the ability to repay that mortgage you’re giving them. Those come with particular methods on calculating income from pay stubs to W-2s and also self-employed buyers. It was a very inside the box approach to calculating income. This happened in 2014, 2015. Then they said,

If you’re not able to get them to fit inside that box, you can give them a non-qualified mortgage. And this is where all of the loans that you’ve heard about that are alternative documentation types, right? Alternative documentation could be described as your bank statement loans or your profit and loss statement loans, P &L loans for your self-employed buyers, right? Where maybe they do have

business tax returns, but because of the deductions, they are afforded by the IRS code, the net profit that is whittled down from those businesses is not enough to justify a traditional full documentation approval, right? So let’s work on a non-QM bank statement or P &L loan for the self-employed buyers. For a lot of investors, it’s absolutely been the DSCR loan, right?

Debt service coverage ratio is a fancy term that nobody really needs to remember, but for any potential investor buying a rental property, it just means I don’t even request your pay stubs and tax returns in W-2s. I don’t even want to see them. We are going to base the approval for this loan solely off the positive cash flow of the property that you want to buy. We will look at the application, the purchase price, and your down payment.

come up with the interest rate that you qualify for that gives us how much the mortgage is going to cost on that property. And then through either a lease agreement that you provide or an appraisal that we order, we’re gonna determine what the net rental income, what it’s gonna lease out for, and as long as that cash flows positively, ⁓ then you’ve got an approval. So these DSCR loans and the non-QM loans writ large have

really blown up in the past dozen years. They’ve gone from literally small single digits in terms of the percentages of funded loans we do in a given month back in 2015, all the way up to more than 30 % of the loans that we fund today.

Kristen Knapp (19:45)

Wow, I mean it makes a lot of sense to do business that way. Why is this a relatively new sector?

Anthony DiToma (19:51)

So, boy, ⁓ that’s a loaded question and I’m not gonna let you get me into any trouble on this. But the fact of the matter is when it comes to bank statements ⁓ and P &L loans, those have been around for decades, right? In fact, I think a lot of Congress ⁓ and the people that ended up drawing up ⁓ the legislation that gave us these types of programs, I think those types of programs were ones that

really had a target on their backs for potentially causing a large part of what happened during the mortgage meltdown in 07, right? From a compliance or congressional standpoint, you never want a industry full of lenders that are willing to lend out money to people who have no ability to pay that money back. So in that regard,

⁓ It was good for them to kind of get a once-over to be sure that they were really serving a population But doing so in a responsible way ⁓ So a lot of those programs have been around for years debt service coverage ratio I think that’s a relatively new loan program loan product, but the fact of the matter is If you’re an investor buying the house the lending community quickly understood that

Yeah, there’s risk, there’s added risk in lending to somebody buying a non-owner occupied property, right? ⁓ However, the idea of them buying that property meant that they were hardly ever going to be the ones making the mortgage payment. They’re coming to you saying, I’m buying this house solely with the intent of putting a tenant in place and that tenant is going to pay down the mortgage and pay my property taxes and insurance.

So it was a very understandable approach on how you can still lend on those types of products without going through the cumbersome approval process of pay stubs and tax returns.

Kristen Knapp (22:03)

makes a lot of sense and you didn’t get yourself into any trouble. ⁓ well that’s awesome. mean, we’re kind of getting towards the end of our time here, but I think you’ve given a lot of good insight into the market and kind of what people should expect and how they should look at it. I would love to hear about your individual approach as a lender. know, or a loan officer, like I know that you have, you think of a house as more than just a house and I would love for you to talk more about that.

Anthony DiToma (22:06)

Hahaha!

Yeah, listen, in our industry, it’s easy to look at a loan number attached to an email line and go down a rabbit hole of production and volume and forget the personal side of it, right? And years ago, it became very obvious to me that a house is more than a house. It’s a home to somebody. And more than a home,

It is the single greatest vehicle for wealth creation in the entire country. Okay? I’ve spent my entire 20 year career ⁓ getting people into homes quickly and painlessly and then showing them how to utilize the appreciation in that home for future wealth creation, right? How to consolidate debt, how to utilize equity products,

for investments in ⁓ other businesses or in additional real estate, right?

And I’ve stayed ⁓ two decades on that premise ⁓ with a real large emphasis on turnkey rental real estate companies like JWB out of Jacksonville, companies like REI Nation out of Memphis, and working with their clients to help build their real estate

portfolios with long-term financing ⁓ so that we can all continue to grow this thing that we call the American dream.

Kristen Knapp (24:08)

I love that. think it’s such a great approach. So thank you so much for sharing so much practical information for us. Tell everyone where to find you and how to work with you.

Anthony DiToma (24:19)

Absolutely. You can find me on ⁓ my email and my cell phone. I feel like my cell phone’s everywhere. ⁓ Anthony.DiToma@SupremeLending.com. You can Google Anthony.DiToma and find us there. And also be sure to follow me on social media, Instagram, @Anthony.DiToma over there for market updates and product rollouts. We’re constantly keeping everybody educated.

Kristen Knapp (24:47)

Fabulous. Well, thank you so much for being here, Anthony. And thank you everybody for listening. I hope you learned a lot and got some inspiration of how to maybe look at your business a little differently. So we’ll see you back next time. Bye.

Anthony DiToma (24:51)

Thanks, Kristen.