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Finance Property with Rental Income, Not Personal Income
DSCR Loans
If you’re a real estate investor or planning to become one, a Debt Service Coverage Ratio (DSCR) loan offers a smarter way to purchase or refinance rental property. At Premier Point Mortgage, we help investors qualify based on the property’s cash flow rather than personal income or tax documents.
When you invest in rental properties, lenders want to be confident that the property’s income can comfortably cover your mortgage payments. This is where the Debt Service Coverage Ratio, or DSCR, comes in.
How It Works
First, we calculate DSCR
Next, we verify rental income
After underwriting, we move to closing
What Is a DSCR Loan
A DSCR loan allows you to qualify using rental income from the property instead of W2s or tax returns. Lenders evaluate the property’s financial health by its Debt Service Coverage Ratio the net operating income divided by annual debt obligations. A DSCR above 1 means the property earns enough to cover its mortgage. Many lenders require a minimum DSCR of 1.20 to 1.25 for approval.
Who Is It For?
This loan is designed for real estate investors with cash flowing properties, LLCs, self employed professionals, and even foreign nationals. You don’t need to verify personal income and some options allow loan approval even without a US credit score.
- Use rental income to qualify for purchasing or refinancing an income property.
- Tap into equity in an existing rental property and pay yourself cash based on DSCR.
- Ideal for non US residents using overseas assets and rental income to qualify.
Let’s Break It Down: Pros and Cons
Pros:
- You do not need W2s or tax returns.
- Income is based on rental cash flow.
- You can finance properties under LLCs.
Pros:
- Faster approval process.
- Fewer documents needed.
- Scale your investment portfolio more easily.
Cons:
- Down payment between 20 and 30 percent.
- Higher rate than conventional loans.
- Higher fees and/or prepayment penalties.
FAQ
Q: What is the minimum DSCR ratio I need?
A: Most lenders require a DSCR of at least 1.20 to 1.25, meaning the property must earn 20 to 25 percent more than its total debt payments.
Q: Can I get a DSCR loan without showing personal income?
A: Yes. These loans are based on the rental income of the property, so personal income documentation like W2s or tax returns is not required.
Q: Is it possible for LLCs or foreign investors to qualify?
A: Absolutely. DSCR loans are often used by LLCs, and many lenders offer programs for foreign nationals even without a US credit history.
Q: Are DSCR loans available for cash out refinancing?
A: Yes. You can refinance your investment property and take out cash based on its value and income.
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Premier Point Mortgage
NMLS #2184348
Premier Point Mortgage guides you every step of the way, making your journey to homeownership stress free; now that’s Home Financing Simplified!
990 Raritan Rd. Clark, NJ 07066
Legal Statements
Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.
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