DSCR Loan
The Debt Service Coverage Ratio (DSCR) loan is a type of mortgage designed specifically for real estate investors. It allows borrowers to qualify based on the prospective rental income of the property rather than their personal income.
We offer the Investor Flex DSCR loan program with various options tailored to different investor needs.
Key Features of DSCR Loan
Eligibility: Loans must be deemed business purpose loans and be exempt from the Ability to Repay (ATR) and Qualified Mortgage (QM) rules. Investment properties only.
Purchase, rate & term refinance, and cash-out refinances are allowed.
Maximum loan amounts vary by product and property type.
DSCR Calculation: The DSCR is calculated by dividing the gross rental income by the proposed PITI (Principal, Interest, Taxes, Insurance, and any applicable association dues).
Property management fees disclosed by the borrower or identified in the loan file must be included in the PITI calculation.
Key Features of DSCR Loan
Prepayment Penalties: Borrowers can elect to add a 1-, 2-, or 3-year prepayment penalty in exchange for better pricing.
Prepayment penalties vary by state and loan terms.
Loan Parameters: Minimum FICO scores and maximum LTV (Loan-to-Value) ratios vary by product.
Minimum DSCR requirements also vary by product.
Specific reserve requirements must be met, which can affect pricing.
Gift funds and appraisal waivers have specific eligibility criteria.
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