What is a DSCR Loan?
DSCR (Debt to Service Coverage Ratio) loans are designed for borrowers who own or purchase residential investment properties. DSCR is a measure of how much monthly rental income a homeowner receives (or could receive) from the subject property in relation to the homeowner’s monthly mortgage payment inclusive of property taxes, insurance, HOA dues, etc. DSCR loans are eligible for rental properties only.
Understanding the DSCR Loan
DSCR loans (Debt Service Coverage Ratio) are mortgage loans used for purchasing or refinancing short-term or long-term rental investment properties. No income documentation is required. A DSCR loan qualifies borrowers based solely on the cash flow from the subject property. Market rent as determined by an appraiser and lease agreements (when applicable) are the primary tools used to assess the cash flow of the investment property.
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No income documentation required.
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Loan-to-Value (LTV) as high as 80% for purchase or rate/term refinance transactions, as high as 75% for cash-out refinances.
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Credit score as low as 620.
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Max loan amount is $3,000,000.
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Debt Service Coverage Ratio as low as 0.75. In some cases, no minimum DSCR is required.
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Eligible property types include SFR, PUD, Warrantable and non-warrantable Condos including Condotels, 2-4 units.
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Min loan amount is $100,000.
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Min reserves are as low as 2 months.
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First time investors allowed.
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Borrower can own unlimited financed properties.
Properties can vest title in an LLC, S-Corp, C-Corp, or revocable trust.
Gift funds for down payment eligible.
Unlimited cash in hand for LTV <= 65% or maximum $1,000,000 for LTV > 65%.
DSCR Loan Benefits
- No tax returns, income, or employment documentation required.
- There is no DTI or residual income requirement.
- Properties can vest title in an LLC, S-Corp, C-Corp, or revocable trust.
- Interest Only loans available.
- Cash-out proceeds can satisfy reserves requirements.
- Vacant properties with no vacancy factor are eligible for refinancing.