What is Debt Service Coverage Ratio Loans?
A Debt Service Coverage Ratio (DSCR) loan is an investment property mortgage that you can qualify for based on the cash flow of their rental property. We only use the subject property's rents as income, instead of employment and debt qualifications.
Defining DSCR
A Debt Service Coverage Ratio determines a borrower's ability to repay their debt based on the property's net cash flow. Once calculated, the property will either have a net positive or net negative cash flow.
Positive Net Cash Flow means that a borrower receives enough monthly rental income to cover their entire fixed monthly expenses.
Negative Net Cash Flow means that a borrower does not receive enough monthly rental income to cover their entire fixed monthly expenses
Benefits of DSCR Loans
- No tax returns or employment required because DSCR loans qualify borrowers based on the expected market rent of the investment property, income and employment are not a qualifying factor. That means we don’t ask for tax returns, paystubs, or other debts at all during the loan process.
- Adjustable and Fixed Rate, and Interest. Only Loan Term Options. We offer 30- and 40-Year Interest Only payment options with our DSCR loan. These loan terms can lengthen the repayment period of a borrower’s mortgage, provide interest only payments on the first 10 years of the loan, and therefore their lower monthly payment obligation.
- Short Term Rental Income Allowed. Financing is available for properties that generate short term rental income like AirBnB or VRBO properties.
