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A DSCR program may evaluate eligible rental income relative to the property’s housing expense instead of relying primarily on the investor’s personal income calculation.
The debt-service coverage ratio compares eligible property income with the applicable housing expense. The source program included scenarios beginning below a 1.00 ratio, but the required ratio, calculation and pricing vary by current lender guidelines.
Programs may be available for experienced or first-time investors, qualifying short-term rentals, eligible two-to-four-unit properties, condos, purchases, refinances and cash-out transactions. Some scenarios may offer interest-only payments or delayed financing.
Credit, assets, reserves, entity structure, property value, market rent, condition and eligibility are reviewed. The source program described loan amounts up to $2.5 million and leverage up to 85%, but those figures are scenario-dependent and not a commitment or guarantee.
Frequently asked questions
DSCR generally compares eligible rental income with the investment property's applicable housing expense, using the selected program's calculation.
Program approaches vary. The property cash flow may drive qualification, but credit, assets, reserves, entity structure and property eligibility are still reviewed.
General information is useful. A mortgage professional can help you evaluate the facts that apply to you.
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