DSCR home loan benefits & guidelines
A debt service coverage ratio (DSCR*) home loan is designed for real estate investors looking to finance income-producing properties, whether single-family homes or multi-unit structures. Also called an investor cash flow loan, it is an option that allows you to qualify using your rental property's income.
Why choose a DSCR home loan?
A DSCR home loan focuses on the cash flow from a rental property, not on personal income documents, so you do not need to use your personal income or tax returns.
DSCR home loan guidelines
To qualify for a DSCR mortgage, you will need:
- Minimum credit score of 660
- Down payment of 20%
- Loan-to-value ratio of 80% or lower
Most lenders seek a DSCR ratio of at least 1.0. The ratio is determined by dividing the property’s net operating income by its total debt service, which includes monthly mortgage payments of both principal and interest. Loan amounts typically range from $100,000 to $3 million.
How to apply for a DSCR mortgage
Applying for a DSCR mortgage is simple with Rate’s Digital Mortgage. Follow these steps.
1. Review your finances
Check your credit score, income, DTI ratio and cash on hand for a down payment.
1. Review your finances
Check your credit score, income, DTI ratio and cash on hand for a down payment.
2. Gather key documents
In most cases, you’ll need to provide income verification, tax returns, asset statements and personal identification.
3. Apply online
Once you submit your application, your Loan Officer will help you from there.
“The Guaranteed Rate Team was very easy to work with! Information was clear and all available through my portal for review at all times. Additionally the team was very responsive to any and all questions we had along the way.”
*Eligible borrowers must have a minimum DSCR of one. Property type restrictions apply. Eligible for fixed and adjustable rate mortgages. Interest only payment options are available. Gift funds may be used for down payment and closing costs after the borrower has documented the minimum required borrower contribution. Applicant subject to credit and underwriting approval. Additional restrictions apply.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Rate for current rates and for more information. All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction.
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