What are DSCR Loans and How Can They Supercharge Your Investing

Have you had problems qualifying for conventional financing for your investments? Do you want to protect yourself from liability and own your properties under an entity? Does keeping personal and business debts sound appealing to you? Are speed and certainty things that you value?

This is why among other reasons, people choose DSCR loans over conventional bank loans to finance their investments. With the flexibility to use income projections for both long-term and short-term (Airbnb, VRBO, Etc.) rentals and exclude any personal debts it is ideal for all kinds of Investors.

What are DSCR Loans

DSCR stands for Debt to Service Coverage Ratio, or put simply monthly rent (Property Income) / monthly payment. To add a point of clarity a lot of lenders will compare DSCR loans to commercial loans and while it is true that they are similar in nature one key distinction to be made is commercial lenders will take your NOI (income after operating expenses) and divide that over the payments whereas DSCR lenders will take your gross property income/payment.

Isn't the lender worried you will miss a payment if your tenant decides to move? This is a common misconception, almost all DSCR lenders will require rent loss coverage in your insurance policy to prevent this from happening.

How To Qualify For a DSCR Loan

Your first step should be to call a licensed loan officer that specializes in these types of loans, you can reach out to me or any of the other experienced loan officers at The1Brokerage as guidelines are always changing. Some of the things we will be looking for are credit to get the best terms it helps to be above 700, we will also look for liquidity or available funds to put down.

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