DSCR
Debt Service Coverage Ratio (DSCR) Loans
A Debt Service Coverage Ratio loan (DSCR) allows borrowers to qualify for financing based on the actual or anticipated rental income, rather than personal income. Lenders evaluate whether the rental income is sufficient to cover 100% of the mortgage payment.
Who typically uses DSCR loans?
DSCR Loan Guidelines
With DSCR loans the application process is simplified. We do not list personal income on the loan application. We just need to document credit, assets, real-estate owned and experience. These loans can be used for long-term and short-term rentals.
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View DSCR Case Studies
What Our Clients Say About Us
DSCR = Gross Rents / Principal + Interest + Taxes + Insurance
Typically, we look for a ratio of 1.0 meaning the property income exactly covers the debt payments. However, we do have no ratio options as well and the ability to structure interest-only financing.
Yes, ratios 1.25 or higher qualify for improved rates
Yes. DSCR loans are available to both experienced and first-time investors. No prior ownership or rental history is strictly required, though strong credit and sufficient down payment/reserves help approval.
Credit report, photo id, property appraisal (with 1007 rent schedule), mortgage statement for primary residence, bank statements (for down payment and reserves, lease (for occupied properties), letter of explanation (to document experience)
No - hard money loans are short-terms with high interest rates. DSCR offer 15 and 30-year fixed terms
We have options from no prepayment penalty up to 5 years. Prepayment penalties on DSCR loans are accompanied with better rates. The longer the prepayment penalty, the better the rate.
Mortgage interest rates are slightly higher on DSCR loans than conventional, but these loans are not subject to TRID and can be closed more quickly
Loan approval is contingent upon the DSCR ratio. If the cash flows do not support the mortgage payment, it can be tricky for the property to qualify. Some options include an investor that will allow a no-ratio DSCR loan (higher rates) or restructured the loan from principal & interest loan to an interest only loan, or possibly exploring a rate buy-down to get the ratio to 1:1
Scout Advisors is a branch of Barrett Financial Group, L.L.C. and can originate a business purpose loan in all 50 states either directly at the branch or through Barrett Financials corporate office.
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. Refinancing your mortgage may increase costs over the term of your loan. Savings, if any, vary based on the consumer’s credit profile, interest rate availability, and other factors. Programs and interest rates are subject to change without notice. Contact your Scout Advisors mortgage expert for current rates and to confirm program eligibility.
