DSCR LOANS
DSCR Loans, or Debt Service Coverage Ratio Loans, are a type of financing designed for real estate investors who own rental properties. These loans are based on the property’s cash flow and its ability to cover the debt service, rather than the borrower’s personal income or credit score. DSCR Loans are popular among investors who want to qualify for financing based on the strength of their rental property’s performance.
PERFECT FOR
DSCR LOANS
EXAMPLE
Sarah owns a portfolio of single-family rental properties that generate consistent monthly income. She identifies a new rental property that she believes will be a strong addition to her portfolio. However, Sarah’s personal income and credit score do not meet the requirements for traditional financing.
Sarah decides to apply for a DSCR Loan, which allows her to qualify based on the cash flow of her existing rental properties and the projected cash flow of the new property. By demonstrating that the combined rental income is sufficient to cover the debt service, Sarah is able to secure the financing needed to purchase the new property and expand her portfolio.
Own rental properties with a strong, stable cash flow
Provide documentation of the property’s rental income and expenses
WHO QUALIFIES
Demonstrate that the property’s DSCR meets the lender’s minimum requirement (typically 1.2 or higher)
Have a clear title on the rental property being financed
Provide a down payment (amount varies based on the lender and the specific property)
WHO QUALIFIES
Own rental properties with a strong, stable cash flow
Provide documentation of the property’s rental income and expenses
Demonstrate that the property’s DSCR meets the lender’s minimum requirement (typically 1.2 or higher)
Have a clear title on the rental property being financed
Provide a down payment (amount varies based on the lender and the specific property)
MORE INFO
WHAT ELSE
DSCR Loans provide real estate investors with a financing option that focuses on the performance of their rental properties.
By understanding the benefits and risks associated with these loans, investors can make informed decisions and leverage the strength of their rental portfolio to secure the capital needed for growth and expansion.
