DSCR: Debt Service Coverage Ratio

Debt Service Coverage Ratio: No-Income Mortgage Loan

With a DSCR loan, you can qualify for a home loan without using your tax returns. As a real estate investor, you can avoid the high rates of private loans, lengthy approval processes, and strict lending criteria with a debt service coverage ratio loan, which is a type of no-income loan. Qualify for a loan based on your property’s cash flow, not your income.

Securing a debt service coverage ratio loan can help you expand your investment portfolio easier than ever before. In this video, DSCR loans are explained by Griffin Funding President and CEO Bill Lyons, who walks you through what these loans are and how they work.

What Is a Debt Service Coverage Loan?
A DSCR loan is a type of non-QM loan for real estate investors. This type of financing prioritizes a metric called the debt service coverage ratio (DSCR) in the application process, which essentially measures the current income a borrower makes from a property versus its debt obligations Lenders use a borrower’s DSCR to help qualify real estate investors for a loan because it provides a snapshot of the borrower’s current cash flow and their ability to repay their debts.

How Does a DSCR Loan Work?
Because real estate investors write off expenses on their properties, some may not qualify for a conventional loan. The debt service coverage ratio loan allows these individuals to qualify for home financing more easily. That’s because DSCR loans don’t require proof of income via tax returns or pay stubs, which may not accurately represent an investor’s annual income due to write-offs and business deductions. Instead, borrowers can buy one or more income-producing investment properties based on the cash flow of those properties.

Want to learn more about debt service coverage ratio loans? Visit our website to learn more about how DSCR loans can help you achieve your real estate investment goals and grow your income: https://griffinfunding.com/non-qm-mor...

If you have any questions about DSCR loans or want to explore other mortgage options, feel free to reach out to our team at [email protected]. We will provide you with a free one-on-one consultation and find the right mortgage for your needs!