DSCR LOANS
About DSCR Loans
DSCR Loans, or Debt Service Coverage Ratio Loans, are a type of financing designed for real estate investors who own rental properties. These loans are based on the property's cash flow and its ability to cover the debt service, rather than the borrower's personal income or credit score. DSCR Loans are popular among investors who want to qualify for financing based on the strength of their rental property's performance.
PERFECT FOR
Who Needs A DSCR Loan?
Investors
Real estate investors who own rental properties with strong, stable cash flow
Refinancing
Investors who may not qualify for traditional financing due to their personal income or credit profile
Need Funds To Close On Property
Investors who want to leverage the performance of their rental properties to secure financing
Improvements On Current Property
Investors looking to refinance existing rental properties to access equity or improve loan terms
PERFECT FOR
Who Needs A DSCR Loan?
DSCR LOANS
What Is A DSCR Loan Used For?
Purchasing a new rental property
Refinancing existing rental properties to access equity or improve loan terms
Making improvements or repairs to rental properties to increase their cash flow
Consolidating multiple rental property loans into a single, more manageable loan
EXAMPLE
DSCR Loan In Action:
Sarah owns a portfolio of single-family rental properties that generate consistent monthly income. She identifies a new rental property that she believes will be a strong addition to her portfolio. However, Sarah's personal income and credit score do not meet the requirements for traditional financing.
Sarah decides to apply for a DSCR Loan, which allows her to qualify based on the cash flow of her existing rental properties and the projected cash flow of the new property. By demonstrating that the combined rental income is sufficient to cover the debt service, Sarah is able to secure the financing needed to purchase the new property and expand her portfolio.
WHO QUALIFIES
Qualifying For A DSCR Loan?
Own rental properties with a strong, stable cash flow
Provide documentation of the property's rental income and expenses
WHO QUALIFIES
Qualifying For A DSCR Loan?
Demonstrate that the property's DSCR meets the lender's minimum requirement (typically 1.2 or higher)
Have a clear title on the rental property being financed
Provide a down payment (amount varies based on the lender and the specific property)
MORE INFO
Benefits Of A DSCR Loan:
Ability to qualify for financing based on the rental property's performance, rather than personal income or credit
Potential for more favorable loan terms compared to traditional financing options
Opportunity to leverage the equity in existing rental properties for further investments
Streamlined qualification process focused on the property's cash flow
WHAT ELSE
Risks To Consider
DSCR Loans provide real estate investors with a financing option that focuses on the performance of their rental properties.
By understanding the benefits and risks associated with these loans, investors can make informed decisions and leverage the strength of their rental portfolio to secure the capital needed for growth and expansion.
Reliance on the rental property's continued performance to service the debt
Potential for higher interest rates compared to traditional financing options
Exposure to market fluctuations that could impact the property's rental income
Possibility of foreclosure if the property's cash flow is insufficient to cover the loan payments
Company
Legal
Antonine Capital is a private money lender providing business purpose loans for real estate investments. * We do not give tax or legal advice. Please consult an attorney, CPA, or licensed professional for your needs. All examples and case studies are for educational purposes only.