DSCR Loans
Debt Service Coverage Ratio (DSCR) loans qualify investment properties based on the property's rental income relative to its debt, rather than the investor's personal income.
What goal may it serve?
Financing an investment property when you want qualification based on the property's cash flow.
Who might consider it?
Real estate investors who want to qualify based on property performance rather than personal income documentation.
Major tradeoff
DSCR loans may have higher rates or larger down payment requirements than traditional financing, and they depend on the property generating sufficient rental income.
What information matters?
The property's purchase price, expected rent, your down payment funds, and the property type.
FAQs
How is DSCR calculated?+
DSCR is the property's gross rental income divided by its annual debt obligations. A ratio above 1.0 means the property generates more income than its debt.
Do I need to show personal income?+
Often no — that's the main appeal. Qualification is based on the property's cash flow. A loan expert can explain the details.
Logical next step
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