Debt Service Coverage Ratio [ DSCR ]
The Debt Service Coverage Ratio is a ratio of a property’s annual net operating income and its annual mortgage debt, including principal and interest. Lenders use DSCR to analyze how much of a loan can be supported by the income coming from the property as well as to determine how much income coverage there will be at a specific loan amount.
What Are the Requirements?
- Must be an Investment Property
- Minimum credit score 660
- Minimum down payment of 20% for Single Family Homes and Warrantable Condos
- Minimum down payment of 30% for Non-Warrantable Condos & Condotels
- Minimum down payment of 30% for 5 to 8 unit properties
- Maximum of 75% loan to value for refinances
- Borrower must own a primary residence
What is the appeal of a DSCR loan?
One of the big benefits of a DSCR loan is that a personal income Is not required. We are interested in the cash flow the subject property is calculated to generate.
Fidelity Home Group Florida DSCR Loan features:
- No leases are required to be listed
- No lease required if not rented
- Available for purchases and cash-out or rate-term refinance
- No limit on total number of properties
- Maximum loan amount $5 million
- No personal income used to qualify
- Qualifications based on property cash flow
- Condotels and Non-Warrantable Condos are eligible
- 40 year fixed interest only available
- Properties can be in LLC’s name
- Minimum Debt Service Coverage Ratio of 1%
What Is a Debt Service Coverage Ratio Loan?
A DSCR loan is a type of non-QM loan for real estate investors. We use our DSCR Mortgage Program to help qualify real estate investors for a loan because it can easily determine the borrower’s ability to repay without verifying income.
How Does a DSCR Loan Work?
Commonly real estate investors write off expenses on their properties, some may not qualify for a conventional loan. The debt service coverage ratio loan allow you to qualify more easily because we do not require proof of income via tax returns or pay stubs.