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DSCR Investment Loans —Investors in CA, CO, and NV Can Qualify to Purchase Investment or Rental Properties

Compared to our other loan options offered at Greenfront Mortgage, DSCR Investment Loans are for investors rather than a typical home buyer looking for somewhere to live. DSCR stands for debt service coverage ratio and measures a firm's available cash flow to pay current debt obligations. Lenders and companies commonly use Debt Service Coverage Ratio as a metric when negotiating loan contracts on investment property purchases.

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How is DSCR calculated, and Why Do Real Estate Investors Pay Attention to It?

The DSCR can be calculated by taking an investor’s net operating income and dividing it by their total debt service — the total amount of debt you owe in a given year. Total debt services encompass both the principal and interest payments on a loan. So, an example of a DSCR calculation looks like this:

Let’s say a business has a net operating income of $250,000 and a total debt service in the amount of $115,000. We would take $250,000 and divide it by $115,000, resulting in an approximate DSCR value of 2.17. The larger the DSCR is, the more net operating income available to service the debt. So, applicants with solid DSCRs tend to have greater approval odds for a home loan*.

Of course, every lender has different DSCR requirements to fund your investment property loan, so reach out to Maggie today to see what qualifications you’d need to secure your DSCR loan.

DSCR Investor Loans

Investors can make a case to lenders that the investment property they’re interested in will be able to produce a certain amount of monthly income that can supplement and support the mortgage payments. So, for areas like Lake Tahoe (our home base) — which has quickly become one of the hottest vacation rental markets in the country over the last few years — DSCR can be a fantastic option to secure new properties to expand your investment portfolio.

Want more information about DSCR loans and how they can help you with your investment goals? Get in touch with Maggie and the team of experts here at Greenfront Mortgage for a consultation to get started on your loan approval process. We look forward to working with you, answering any questions you have, and getting you approved for your new home loan.