What is  a DSCR Loan?

 A debt service coverage ratio (DSCR) loan is a loan that  enables real estate investors to finance investment properties without proof of income, tax returns, or W-2 forms. DSCR loans are well suited for investors who might not qualify for conventional financing due to their current income, debt situation, or employment status..

HOW TO CALCULATE DSCR

NOI
Determine the property’s annual net rental income. Lenders will typically look at both an appraiser’s comparable rent schedule and the property’s yearly rental income (taken from a signed lease agreement). Generally, the lesser number of the two is used.

Annual Debt

Calculate your annual debt which is calculated from your yearly PITI payments. That’s the sum of your costs from principal, interest, taxes, insurance, and HOA fees if you have them.
DSCR
Divide its annual NOI by annual debt service payments.
A debt service coverage ratio of higher than 1.0 shows that a property is making money and can pay its debts, but generally DSCR lenders are looking for a ratio higher than that.
 
 

HARD MONEY LOAN

Hard money is a type of lending often used in real estate investing. Hard money loans are also known as asset-based loans, bridge loans or STABBL loans (short-term asset-backed bridge loans). Hard money loans are used for short-term financing, and the loans are always secured by an asset. Traditional financial institutions don’t offer hard money loans, so this lending option is only available through private lenders and individual investors. 

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John Davison

+1(484) 986-7388 | john@digz.house

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