DSCR Loans for Rental Properties

The debt-service coverage ratio, or DSCR, helps determine the debt to cash flow ratio of any individual or organization. This ratio is being used more and more frequently to determine whether a borrower can get a loan.

DSCR is determined by dividing debt from net income. A healthy DSCR indicates that someone can effectively pay their debts, and lenders are more likely to approve a loan for someone with a good score.

Loans are offered based on the DSCR and future potential of the property. Because these loans are low risk, lower interest rates are often granted. This is a great option for real estate investors because it allows them to qualify for a loan based on their property’s cash flow, rather than looking at their personal income. These DSCR Loans have faster application and closing times, and real estate investors can commit to multiple properties at once.

If you are in the renting business, and you’re looking for ways to acquire new properties to rent, the DSCR loan is a great option for you!

To improve your cash to debt ratio, you can pay down current debt, reduce your expenses, and more effectively live on a budget. By improving the DSCR ratio, you’ll likely qualify for lower interest rates on your loan and can invest in multiple properties at once.

If you’re interested in learning more about debt-service coverage ratios, contact one of our loan officers today! They’d love to help you find the best loan solution for your needs.