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DSCR Mortgage

DSCR Mortgages [ Debt Service Coverage Ratio ]


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?

  • Minimum credit score 660
  • Must be an Investment Property
  • Minimum down payment of 20% for Single Family Homes
  • Minimum down payment of 30% for Non-Warrantable Condos & Condotels
  • Minimum down payment of 30% for 5 to 8 unit properties
  • Minimum of 75% loan to value for refinances


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 DSCR features:

  • Borrower must own a primary residence
  • 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
  • No limit on the number of properties owned and can finance up to 10 properties for 1 investor
  • Condotels and Non-Warrantable Condos are eligible
  • 40 year fixed interest only available
  • Properties can be in LLC’s name

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?

Because real estate investors write off expenses on their properties, some may not qualify for a conventional loan. The debt service coverage ratio loan allows these individuals to qualify more easily because they don’t require proof of income via tax returns or pay stubs that investors either don’t have or that don’t represent their true income due to write-offs and business deductions.

   


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