What is a Top Rated DSCR Investor Cash Flow Loan or Debt Service Coverage Ratio (DSCR) Loan?
Top Rated DSCR Investor Cash Flow Loan, also known as a debt service coverage ratio/DSCR loan is a type of financing to purchase or refinance an investment property that currently or potentially cash flows. This is common tool to qualify entities or persons rental property real estate transaction. The ability to produce enough rent to completely cover their PITI payments. The higher the ratio gets, the easier it becomes for that entity or person to obtain financing for the investment property. The DSCR calculation is the property current or future rents divided by new PITI (principal, interest, taxes and insurance) monthly payment. If your property is collecting rents that covers your current PITI payment your property debt services.
Example of DSCR Calculation: New P&I = $1,851.26 + 758.53 taxes + $147 insurance = $2,756.79 PITI | $3200 Current Rents/$2756.79 = 1.16 DSCR
A ratio over .75% will be needed to qualify for the loan. Higher the ratio, lower your rate will be. the rate will be.
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.
Here’s 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).
Highlights of a DSCR Investor Cash Flow Loans
- No Tax Returns
- Employment not Required
- No Income Required
- No Debt to Income Ratio Calculated
- 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
- 80% LTV on a purchase
- 75% Cash out on a refinance
Valor Lending Group
Our Goals: Excellence. Simplicity. Limitless
We take pride in our lending services. Adam Lawrence is your loan officer for all mortgage and loan needs. Call or email today!
To keep up on all lending and industry news please use Mortgage News Daily – Mortgage And Real Estate News
