A smart way to finance your real estate portfolio

A smart way to finance your real estate portfolio

Non-QM Debt Service Coverage Ratio (DSCR)

Qualify for a home loan without using your tax returns. As a real estate investor, you can avoid high rates and high points of private loans, lengthy approval processes, and strict lending criteria with a debt service coverage ratio loan, which is a type of no-income loan. Qualify for a loan based on your property’s cash flow, not your income. A typical Non-QM Debt Service Coverage Ratio (DSCR) loan allows a borrower to qualify for a mortgage based on cash flow generated from an investment property – through a rental, for example – as opposed to their personal income. A calculation generates a debt-to-income ratio and the higher the ratio, the better.

Self-Employed

VA Eligible

Real Estate Investor

Benefits of DSCR Loans for Investors

  • Potentially quicker closing times
  • No income or job history verification required
  • No limit on the number of properties
  • Loan amounts up to $5,000,000
  • Unlimited cash out
  • As little as 20% on down payments
  • Interest-only loan option available
  • Suited for new and seasoned real estate investors
  • Both long-term and short-term rentals are eligible (Airbnb, VRBO, etc.)
  • No reserves required on cashout loans, 6 months required on all other loans unless the DSCR ratio is less than 1.

DSCR Formula Calculation

Annual Gross Rental Income/Debt Obligations = DSCR

  • To find your Gross Rental Income we take your annual rental income based on your lease agreement and the appraiser’s comparable rent schedule (form 1007) and use the lesser of the two. In some cases, if you can prove a twelve month history of rental income you can qualify off of that rather than the appraiser’s market rent.
  • Next, you’ll need to find your annual debt. Your annual debt for loan qualification purposes equals the total annual principal, interest, taxes, insurance and HOA (if applicable) payments.
    Annual Debt = Total Annual PITI payments
  • Next, you’ll divide your annual gross rental income by your annual debt for your ratio.
    DSCR = Annual gross rental income/Annual Debt
year(s)
per year
per year

Your total monthly payment

Principal & Interest
Home insurance
Property taxes
PMI

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Call us today! (800) 671-6204

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(800) 671-6204