Articles on: Investing

What is a DSCR loan?

DSCR stands for Debt Service Coverage Ratio. Eligibility for DSCR loans is based on verifying the rental property income, not your personal income, tax returns and pay stubs. But while DSCR loan programs have advantages, the rates are slightly higher so if your income isn't maxed out with other properties, a conventional loan might be better, but we can help you decide.

To calculate the DSCR ratio, we do some basic math. We divide the property's gross monthly rental income by the property carrying cost (this includes principal and interest loan payments, taxes, home owners insurance, HOA, etc). So, if the property's monthly rent is $6,000 and the property's monthly cost is $5,000, that's a 1.2 ratio.

Updated on: 07/06/2023