WHAT IS A DSCR LOAN?

DSCR stands for Debt Service Coverage Ratio.

Eligibility for DSCR loans is based on verifying the rental property's income, not your personal income, tax returns and pay stubs. Conventional loans rely on your income to support extra loan payments - so after a couple of properties, you max out your ability to borrow (unless you earn squillions). That's where DSCR loans come in. But while DSCR loans have advantages, rates are slightly higher so if your income isn't maxed with other properties, a conventional loan might be better. We can help you decide.


DSCR DOWN PAYMENT

DSCR requires a higher down payment than other investment loan programs. Typically your down payment can be as low as 15% to 20% but it's based on your credit score and the Coverage Ratio (see below). Down payment funds cannot be a loan or gift and must come from verified sources.


Coverage Ratio

The Coverage Ratio for DSCR loans are very important. Most programs require a 1.0 but some may require a 1.25. What does that mean? It means the properties rental income must cover 100% of the mortgage payment or 125% of the mortgage payment. Let's say your mortgage payment is $2,000 a month and you are buying a 2 unit property. That means the units need to rent for a min of $2,000 a month at 1.00 or $2,500 at 1.25.

DSCR INCOME DOCUMENTATION

No personal income information is required on DSCR loans!

As you can see, DSCR loans are a great option for investors looking to expand their portfolio. If you would like more information, please call me at 352-446-9422 or email me at rick.scherer@valorhl.com. If you would like to get pre-approved, you can apply now.