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We offer DSCR Loans

What is a DSCR Loan?

DSCR stands for Debt Service Coverage Ratio and is used as an indicator of financial stability. The DSCR Calculation takes into account two things: 1) cash flow from your investment property; 2) any personal income that you may have generated during this time period.

The idea behind the calculation was created so people could take out loans without having their personal finances hinge on whether or not they made enough money to cover daily expenses like rent, groceries, bills, etcetera with just one source of revenue-the rental properties themselves! This enables them more freedom when applying for new credit.

How to Calculate Your DSCR

To find your DSCR, divide the net operating income (NOI) of a property by its debt service coverage ratio. The NOI is found through subtraction from all necessary expenses for operations plus any other sources that may provide revenue to you, such as tax benefits or rent checks issued regularly but not actually earned until later than year-end when they’re finally collected.

The mathematical formula for calculating your DSCR = NOI ÷ DEBT SERVICE

Example

To find your DSCR, divide the net operating income (NOI) of a property by its debt service coverage ratio. The NOI is found through subtraction from all necessary expenses for operations plus any other sources that may provide revenue to you, such as tax benefits or rent checks issued regularly but not actually earned until later than year-end when they’re finally collected.

DSCR = 3,000,000 ÷ 500,000=6

Why DSCR Matters

Your debt service coverage ratio is a measure of how much money you can make from your property. It’s important because it communicates to lenders whether or not they’re taking on enough risk with each loan and if the borrower won’t be able to meet their obligations after borrowing more funds than what was initially invested in that asset class (i.e., real estate).

How DSCR Loans Work

Lenders offer DSCR loans for a variety of property types, including multifamily properties, commercial office spaces, private mortgages, and hotels/resorts. The minimum number that can be obtained depends on the economic conditions in your area – if you live during growth years, then it may not matter as much what kind or how high an interest rate is because there will probably always remain demand from borrowers who want to take advantage while they still have access!

If you’re looking for a loan with low risk, then it’s best to go with one of these types. The amount they offer will depend on your specific property but most likely falls within 3-5 million dollar limits.

How to Apply for a DSCR Loan

Go through underwriting

It is crucial to know the full details of your loan before you sign. Your lender will outline all aspects including its value, term fees and more, so that there are no surprises later down the line; they also calculate DSCR during this stage.

Documentation

You will fill out the standard loan documentation. None of which will include your personal financial history. All financial documents will contain only business or rental property information. DSCR loans are based solely on your debt service coverage ratio, not your personal credit.

Closing

DSCR loans are a much faster application and closing process than other types of loans due to the fact that they don’t require information about your personal finances.

Wrap up

DSCR loans are an accessible option if you have a revenue generating business or property.

It doesn’t matter what type of income-generating asset it is because these lowDoc funding solutions don’t check personal credit before approving funds, which means they’re great for investing in real estate!

With our platform, you can find a lender in just minutes that will help meet your needs and get the best deal for both parties. Start an investment property journey with us today!