DSCR Loan Programs

A DSCR (Debt Service Coverage Ratio) mortgage loan is a type of loan used for investment property financing. It focuses on the property’s income potential rather than the borrower’s personal income. This ratio measures the property’s ability to generate enough income to cover its debt obligations, including mortgage payments. It is calculated by dividing the property’s Net Operating Income (NOI) by its total debt service (principal, interest, taxes, insurance and association payments on the loan).

Your ratio is what allows you to qualify. For example, if your property has a PITI payment of $2000 a month and is generating a NOI of $2500 a month, then your ratio is 1.25. Further, if your property has a PITI of $2500 and your NOI is $2300 then your ratio is 0.92.

So, what does it take to qualify? There are a handful of DSCR products I like to use, and each of them vary, but generally you will need:

  • 640 credit score
  • A DSCR of 0.75 or greater
  • 20-30% down
  • Purchasing a 1-4 unit investment property

DSCR loans also allow for flexible terms such as:

  • First time investors
  • Vesting in a LLC
  • Multiple financed properties
  • No personal income documentation
  • Short term rentals (such as AirBNB)

If you are considering purchasing or refinancing a rental property, reach out to The French Team who can assist you!

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