DSCR Loans:
Real estate investing is capital intensive. Smart private money financing will help scale your portfolio and grow your cash flow.
Read on and discover:
(1) How DSCR loans differ from conventional loans;
(2) Why they are so popular with real estate investors;
(3) What you should know about them;
(4) How to choose the right DSCR lender…
DSCR (Debt Service Coverage Ratio) loans focus on propety cash flow not personal and other business income. No tax returns or income verification are required.
DSCR measures if property generates enough income to cover loan payments. It divides net operating income (NOI) by loan principal and interest payments, property insurance, taxes, and utitlities not tenant paid.
If rental income = $120,000 and expenses+ loan payments total $100,000, DSCR =1.2.
DSCR 1.0+ means there is enough income to cover debt payments and expenses. Higher DSCR is less risky for lenders.
Lenders usually require 1.0 to 1.25+ DSCR. Our minimum is 0.75X. We even finance vacant properties with no DSCR.
Conventional lenders use your debt-to-income (DTI) ratio to determine loan eligibility. Global DTI compares your personal and other business income to your total debt payments. DTI of less than 43% is often required for approval. DTI requires income verification, tax returns annually, endless red tape. You usually need to hire a CPA and spending money and time that DSCR loans avoid.
Conventional loans have strict loan limits set by Fannie Mae and Freddie Mac. DSCR loans permit higher loan amounts.
DSCR loans are the top choice by many experienced real estate investors:
Simplified Qualification
DSCR loans make it easier to qualify for financing multiple properties. They focus on the financial performance of each property rather than your overall financial situation.
Loan-to-Value (LTV) Ratio measures loan amount relative to property value. DSCR loans with 75% to 80% LTV, with 20% to 25% downpayments are typical.
DSCR interest rates vary with property location, credit score, and DSCR.
DSCR loans have slightly higher rates than conventional because investment properties are higher risk than owner occupied homes. Flexibility and ease of qualifying make DSCR the best choice for most investors.
DSCR loans have prepayment penalties, if you pay off the loan early. We offer flexible prepayment options.
DSCR loans with 30 year amortization or interest only often have lower monthly payments than conventional loans with lower rates and 5 to 20 year terms.
Finding the right lender can make the difference between a smooth process and a frustrating one.
Work with a lender who specialize in investor loans. Eagle only finances real estate developers, builders, rehabbers, and investors. We understand your needs and challenges.