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Rental Loans (DSCR Loans)

Introduction to DSCR Rental Loans: Debt Service Coverage Ratio (DSCR) rental loans are aimed at real estate investors seeking financing for income-generating properties, such as rental units. DSCR loans focus on the property’s ability to generate sufficient rental income to cover the loan payments.

How DSCR Rental Loans Work: Investors apply for DSCR rental loans based on the property’s projected rental income. Lenders analyze the property’s income potential and the investor’s financial stability. If the property’s rental income can support the loan payments with a healthy margin, the loan is approved. The rental income serves as the primary repayment source.

Benefits of DSCR Rental Loans:

  • Reliance on property income rather than personal income.
  • Flexibility in the loan approval process.
  • Suitable for investors building a portfolio of income properties.

Considerations for DSCR Rental Loans:

  • Rigorous property assessment to ensure income sufficiency.
  • Potentially larger down payments compared to traditional mortgages.
  • Focus on property management to maintain rental income stability.

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