SOME OTHER FEATURES OF OUR PROGRAM
- 30 Year Amortization And 30 Year Fixed Rate
- 85% LTV On Cash-Out Refinance's- Pull all your cash out the deal, plus more for the next one!
- Rates starting at 5.375% N/O/O
- Flexible Amortization Options | Interest Only for 3 or 5 years!
- No seasoning requirements. -Pull cash out your property even if you owned it for a week!
- No Income Verification. No Tax Returns.
- We lend to corporate entities or individuals
What Is A DSCR Loan?
Unlike a consumer or owner-occupied mortgage loan, but similar to a commercial real estate mortgage, a DSCR loan is underwritten based on property-level cash flow, rather than personal income. DSCR or Debt-Service Coverage ratio is a tool to help lenders understand a borrower's ability to pay back a loan based on the monthly rental income of the property. DSCR is a simplified way to measure cash flow and is calculated by dividing the monthly rent by the monthly principal and interest payments, taxes, insurance, and association dues (PITIA). DSCR ratio is a tool to help lenders understand a borrower's ability to pay back a loan based on the monthly rental income of the property.
For a commercial or multi-family property, DSCR is calculated by dividing the annual Net Operating Income (NOI) by the annual debt service (same thing as the annual PITIA). The formula for commercial property DSCR is:
For example, if a property generates a Net Operating Income of $100,000 annually and its annual debt service is $81,783, the equation would like this: - The annual debt service in this example is less than the Net Operating Income, which makes the monthly cash flow positive.
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
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
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
DSCR Loans Allow Investors to Borrow in an LLC or EntityMany experienced investors prefer to borrow through an LLC or corporation to protect their identity and other investments. This adds an extra layer of protection to the investor's personal assets for any unfortunate incidents on the property. Conventional loans can only be obtained in an individual(s) name.
Most DSCR Lenders have more flexible common sense limitations on the maximum number of properties financedEven if an investor has enough personal income to support multiple mortgaged rentals, with traditional loans you are maxed out at ten loans. Most DSCR lenders do not have set limits but instead use common sense when evaluating an investor's maximum credit exposure.
DSCR loans require less documentationWhen applying for a conventional mortgage, you have to gather all of your pay stubs, bank and asset statements, and tax documentation, including tax returns. The underwriters are going to dive deep into your personal financial documents and history, which is time consuming and tedious. Any missing documentation or schedules in your tax returns can lead to lengthy delays. Since DSCR lenders focus on the value of the property and the expected cash flow of the property, plus the quality and depth of your credit, there is far less necessary documentationt. Most DSCR lenders will not ask you for documentation to verify your employment, income or assets (beyond required liquid reserves).
Minimum Down PaymentAlso referred to as investment property loans, Non-QM loans, and rental loans, among other synonyms, DSCR loans have become quite trendy recently. So what is all the buzz about? While it is possible for investors to obtain a conventional loan or funds through a small bank, this financing is tedious to qualify for and has substantial liquid reserve requirements. DSCR Loans, on the other hand, are specifically designed for the professional real estate investor to use cash flow generated by the property as a qualification. Let's take a closer look.
DSCR Loans are Underwritten Based on Gross Rental Income Instead of Personal Financial HistoryExperienced real estate investors with multiple mortgaged investment properties and self-employed investors without W2's often have difficulty meeting conventional loan criteria. The credit, reserve, and income requirements of conventional loans are strenuous. Further, they are underwritten using Debt-to-Income ratio or DTI, which looks at your personal assets compared to your personal debt. If you are trying to finance the purchase of a rental property with a conventional loan, the payment for the new loan will be included in the debt portion of your debt-to-income calculation. Whether you can offset that new monthly payment with a portion of the expected rent will depend on how well you can document the actual or expected rents from the property.
Investors that have a lot of personal income from non-investment property sources, may be able to cover the “cash flow gap” on their DTI calculation up to some point. Investors that are self-employed or who have multiple mortgaged investment properties may not have income from other sources to cover this gap. Using debt service coverage ratio eliminates DTI from the underwriting and instead focuses on the rental income from the subject property relative to its monthly payments.
DSCR Loans Allow Investors to Borrow in an LLC or EntityMany experienced investors prefer to borrow through an LLC or corporation to protect their identity and other investments. This adds an extra layer of protection to the investor's personal assets for any unfortunate incidents on the property. Conventional loans can only be obtained in an individual(s) name.
Most DSCR Lenders have more flexible common sense limitations on the maximum number of properties financedEven if an investor has enough personal income to support multiple mortgaged rentals, with traditional loans you are maxed out at ten loans. Most DSCR lenders do not have set limits but instead use common sense when evaluating an investor's maximum credit exposure.
DSCR loans require less documentationWhen applying for a conventional mortgage, you have to gather all of your pay stubs, bank and asset statements, and tax documentation, including tax returns. The underwriters are going to dive deep into your personal financial documents and history, which is time consuming and tedious. Any missing documentation or schedules in your tax returns can lead to lengthy delays. Since DSCR lenders focus on the value of the property and the expected cash flow of the property, plus the quality and depth of your credit, there is far less necessary documentationt. Most DSCR lenders will not ask you for documentation to verify your employment, income or assets (beyond required liquid reserves).DSCR Loans Allow Investors to Borrow in an LLC or EntityMany experienced investors prefer to borrow through an LLC or corporation to protect their identity and other investments. This adds an extra layer of protection to the investor's personal assets for any unfortunate incidents on the property. Conventional loans can only be obtained in an individual(s) name.
Most DSCR Lenders have more flexible common sense limitations on the maximum number of properties financedEven if an investor has enough personal income to support multiple mortgaged rentals, with traditional loans you are maxed out at ten loans. Most DSCR lenders do not have set limits but instead use common sense when evaluating an investor's maximum credit exposure.
DSCR loans require less documentationWhen applying for a conventional mortgage, you have to gather all of your pay stubs, bank and asset statements, and tax documentation, including tax returns. The underwriters are going to dive deep into your personal financial documents and history, which is time consuming and tedious. Any missing documentation or schedules in your tax returns can lead to lengthy delays. Since DSCR lenders focus on the value of the property and the expected cash flow of the property, plus the quality and depth of your credit, there is far less necessary documentationt. Most DSCR lenders will not ask you for documentation to verify your employment, income or assets (beyond required liquid reserves).DSCR Loans Allow Investors to Borrow in an LLC or EntityMany experienced investors prefer to borrow through an LLC or corporation to protect their identity and other investments. This adds an extra layer of protection to the investor's personal assets for any unfortunate incidents on the property. Conventional loans can only be obtained in an individual(s) name.
Most DSCR Lenders have more flexible common sense limitations on the maximum number of properties financedEven if an investor has enough personal income to support multiple mortgaged rentals, with traditional loans you are maxed out at ten loans. Most DSCR lenders do not have set limits but instead use common sense when evaluating an investor's maximum credit exposure.
DSCR loans require less documentationWhen applying for a conventional mortgage, you have to gather all of your pay stubs, bank and asset statements, and tax documentation, including tax returns. The underwriters are going to dive deep into your personal financial documents and history, which is time consuming and tedious. Any missing documentation or schedules in your tax returns can lead to lengthy delays. Since DSCR lenders focus on the value of the property and the expected cash flow of the property, plus the quality and depth of your credit, there is far less necessary documentationt. Most DSCR lenders will not ask you for documentation to verify your employment, income or assets (beyond required liquid reserves).