What Is A DSCR Loan
A DSCR loan is a nonowner-occupied, NON-QM loan utilized by Real Estate investors to expand their portfolios. The principal difference between a conventional mortgage and a DSCR or Debt Service Coverage Ratio is that the borrowers Income and debt are not factored into the qualifying criteria, Instead the Rental property income and monthly obligations are calculated utilizing the Debt Service Coverage Ratio to determine the properties cash flow position. DSCR is a simple means of measuring a properties income based on the monthly rent divided by the monthly principal, interest, taxes, insurance and association fees (PITIA).
As an example, If the property generates a monthly Net Income of $4200 and the PITIA expenses equals $3750 the DSCR would equal 1.12 indicating positive cash flow.
DSCR = $4200 / $3750
DSCR= 1.12
Advantages Of DSCR Loans For Real Estate Investors
- No income Verification
- No limit on the number of properties owned
- Loan amounts up to $5,000,000
- Unlimited cash out
- As little as 20% on down payments
- Credit scores as low as 680
- Cash out Refinance up to 75% LTV
- Ten Year Interest-only payment option available
- Suited for new and experienced real estate investors
- Long-term and short-term rentals are eligible (AirBNB/VRBO etc.)
- No reserves required on cash-out loans. Six months required on all other loans unless the DSCR ratio is less than 1
- For DSCR loans, close in the borrower’s name or an LLC
Program Overview
| Loan Amount: | $75,000 - $5 Million |
| Min Credit Score: | 680 FICO |
| Max LTV: | 80% |
| Term Length: | 30 Years |
| Amortization: | 30 Year Fixed and 5, 7, 10 Year Interest Only Options |
| Interest Rate: | Starting At 6.625% |
| Loan Use: | Purchase, Refinance Or Cash Out |
| Closing Time: | 15-30 Days |
DSCR Loan Property Types
DSCR loans typically can be used for the following property types:
- Single-family (1-4 unit) residential rentals
- Vacation or short-term rentals
- Commercial or multifamily property
DSCR loans typically cannot be used for the following property types:
- Rural properties
- Properties with square footage of less than 750 square feet
- Condotels
- Manufactured housing
- Dome homes
- Log cabins
Our process is easy and you can rely on us!
1. Application
Once you’ve submitted a completed application and pay for the appraisal, we’ll evaluate your credit for approval.
2. Processing
Once your application is approved we will work on gathering all the required documentation.
3. Funded & Closed
When your loan package is complete it is sent to our underwriting department for approval. Once approved, we will schedule a closing date for your loan.