DSCR Mortgages

“Debt Service Coverage Ratio (DSCR)” is “Investor Cash Flow.” This option simplifies the qualification process for obtaining a mortgage on an investment property, especially for borrowers who own multiple properties. With the DSCR (Investor Cash Flow) option, only the rental income from the subject property is considered for qualification, compared to the PITIA payment. No Debt-to-Income (DTI) ratio is developed in this case.

To qualify, the Debt Service Coverage Ratio (DSCR) needs to be 1% or higher. No income, employment, or DTI is required. Instead, qualification is solely based on fair market rent covering the Principal, Interest, Taxes, Insurance, and Association (PITIA) payment at a 1:1 ratio. The borrower must have at least 12 months of landlord experience at any point in their life, which can be confirmed by an old lease or a letter from a Certified Public Accountant (CPA). Rents are determined based on 100% of the market rents from appraisal or leases in place. If leases are available, the lesser of the leases or market rents from an appraisal are used.

• Employment & income not listed on 1003

• Foreign national up to 75% LTV

• 6 months (PITI) reserves are required

The ideal borrower profile for this option includes real estate investors who want to build a portfolio of residentially zoned investment properties or expand their existing portfolio by refinancing for cash out as a down payment to purchase additional properties. Loan amounts can go up to $4 million, and credit scores as low as 660 are accepted, depending on the loan amounts and loan-to-value ratio. Borrowers can own up to 10 properties, including the subject property.

If you’re interested in learning more about this program and how to utilize the Debt Service Coverage Ratio (DSCR) or investor cash flow program, feel free to give us a call. We have exceptional tools to help you identify opportunities and better understand ideal borrower profiles.

Contact us to learn more about DSCR Mortgages.