What is DSCR Loan?
A DSCR loan is a mortgage for investment properties that qualifies borrowers based on the property's rental income relative to its debt obligations, rather than personal income.
A debt service coverage ratio loan, or DSCR loan, is a mortgage for investment properties that qualifies borrowers based on the property's rental income compared to its mortgage payments and other debt obligations. Borrowers use it when they have strong rental cash flow but complex personal income, such as self-employed individuals or those with multiple properties. Watch for higher interest rates and fees than conventional loans, stricter property appraisal requirements, and lenders may require reserves. A DSCR below a certain threshold may still qualify but with less favorable terms. These are non-qualified mortgages and may not suit every investor.
Written by Ralo's editorial automation and checked against the site's copy rules.