Top 5 Things You Didn’t Know About DSCR Investment Property Loans that will maximize your cash flow today!
1. What is a DSCR Investment Property Loan?
DSCR loan(Debt Service Cover Ratio) is loan for investors that do not want to show any verification of income and solely be qualified off of the current monthly rents.
2. How is a DSCR Investment Property Loan calculated?
You take the gross monthly rent collected divided by the new PITI (principal, interest, taxes and insurance) monthly Payment. If your property is collecting rents that covers your new PITI Payment your property debt services and qualify for the loan. *Other conditions will apply.
3. Why do lenders offer this type of financing?
Debt service coverage ratio (DSCR) is one of many different ways of qualifying you when considering a loan application. This ratio is especially important because the result gives some indication to the lender of whether you’ll be able to pay back the loan with interest. A ratio over 1 is good, and the any thing over 1.25 is best.
The minimum DSCR a lender will demand depends on macroeconomic conditions. If the economy is growing, lenders may be more forgiving of lower qualifying ratios.
4. How to interpret your DSCR?
- DSCR < 1: You have negative cash flow. You don’t have enough rental income to service the debt (New PITI payment)
- DSCR = 1: You have exactly enough rental coming in to service the debt (New PITI payment), but you don’t have an additional cash cushion
- DSCR > 1: You have positive cash flow. The higher your DSCR, the more income you have to service the debt (New PITI payment)
5. Highlights of DSCR Investment Property Loans:
- No Tax Returns
- Employment NOT Required
- No Income Required
- No Debt to Income Ratio Calculated
- Cash Flow based on Subject Property rents | if property is vacant upon purchase market rents from the appraisal will be used to calculate DSCR
- SFR, Condo and 1-4 Unit
- Maximum Loan $2.5M | Purchase and R/T Refinance
- Maximum Loan $2M | Cash out Refinance
- Unlimited Financed Properties OK
Top 5 Things You Didn’t Know About DSCR Investment Property Loans
No matter if you’re a first time investor or seasoned, a DSCR investment property loan will take care of your purchase or refinance loan needs.
We take pride in our lending services. Call or Email Adam Lawrence to schedule a time to discuss all residential, commercial, and construction loan needs.
858-344-0323 or alawrence@valorlending.com
Valor Lending Group
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