No Tax Returns Required
The Debt Service Coverage Ratio loan is a great option for investors who want a speedy solution when buying properties.
This non-prime loan is fairly straight forward because the property is used to qualify itself. Basically an appraisal is done providing a value and also rental comps. The rental comparables need to support the monthly payment of the DSCR mortgage.
The investor does not need to show tax returns or a history of purchasing properties like a fix and flip loan. They are also able to finance up to 20 properties this way.
The DSCR ratio is determined by the total mortgage payment compared to the P & I, taxes, insurance and HOA dues if there are any. Great loan and we work with the largest wholesale lender who has great pricing usually in the low 7’s range
The Debt Service Coverage Ratio Loan
Remember, this is a Non-Prime loan
The DSCR loan is a non-prime loan so pricing will be a little higher than Fannie Mae pricing but the amount of documentation required is greatly streamlined so the process is fast. This loan is designed for investors who have lots of rental properties and don’t have time explaining tax returns. Also it is O.K to close in the name of a LLC.
This loan really shines when the borrower has excellent credit,equity in the transaction and a good dscr ratio. This loan works for lower credit scores if the investor has a lot of equity.
Also there are pre-payment penalties available offered by the lender if you want. This scenario gets the rate lower and is not an issue if you know you will keep the property for a while.
