A Debt Service Coverage Ratio (DSCR) mortgage, also known as an Investor Cash Flow Loan, is a financing option designed specifically for real estate investors. Instead of relying on personal income verification, this loan type qualifies borrowers based on the property’s rental income and cash flow, making it an ideal solution for those looking to expand their investment portfolio without the complexities of traditional mortgage requirements.
With a DSCR loan, investors can purchase or refinance rental properties without the need to submit tax returns, W-2s, pay stubs, or other personal financial documents typically required for standard loans. This streamlined approach eliminates employment and income verification, making it an attractive option for self-employed investors, seasoned landlords, and those looking to scale their real estate holdings.
Additionally, properties can be titled in the name of an LLC, providing greater asset protection and financial flexibility. Whether you’re purchasing your first investment property or refinancing an existing one, a DSCR mortgage offers an efficient, hassle-free way to secure financing based on the property’s income potential rather than your personal financial profile.
If you’re an investor seeking a simpler, income-based loan solution, contact us today to explore how a DSCR mortgage can help you achieve your real estate investment goals!
Debt Service Coverage Ratio (DSCR) Loan Requirements
- Rental Income-Based Qualification – Loan approval is based on the property’s rental income, not the borrower’s personal income.
- No Tax Returns or W-2s Required – Borrowers do not need to provide traditional income documentation.
- No Employment or Income Verification – Lenders do not require proof of employment or personal income verification.
- Minimum DSCR Ratio – Most lenders require a DSCR of 1.0 or higher, meaning the rental income covers at least the mortgage payment. Some lenders may allow a lower ratio with higher down payments.
- Credit Score Requirement – Typically, a minimum credit score of 620 to 680 is required, though higher scores may qualify for better rates.
- Down Payment Requirement – Generally requires 20% to 25% down, depending on creditworthiness and lender guidelines.
- Loan Amounts – Can range from $100,000 to $5 million, depending on the lender.
- Property Types Allowed – Can be used for single-family homes, multi-unit properties, condos, and short-term rentals (Airbnb, VRBO, etc.).
- Property Titled in LLC Permitted – Borrowers can title the property under an LLC for asset protection and tax benefits.
- Cash Reserves – Some lenders require 3 to 12 months of reserves, depending on the loan size and borrower profile.
- Interest-Only Loan Options Available – Some lenders offer interest-only payment options to maximize investor cash flow.
- Prepayment Penalties May Apply – Some DSCR loans have prepayment penalties, so investors should review loan terms carefully.
DSCR loans provide a flexible, hassle-free financing option for real estate investors looking to qualify based on rental income rather than personal financials. Contact us today to explore your options!
