DSCR Investment Loan
The Debt Service Coverage Ratio (DSCR) measures the relationship between a property’s annual Net Operating Income (NOI) and its annual mortgage debt service (principal and interest payments).
Commercial lenders use the DSCR to determine how much loan a property’s cash flow can support or how much income coverage exists for a given loan amount.
Two key factors in approving a commercial mortgage are DSCR and Loan-to-Value (LTV). In many cases, the loan amount may be limited by the DSCR even if the maximum LTV is not reached.
Calculating the debt service coverage ratio
he DSCR calculation is rather simple. A business’s DSCR is calculated by taking the property’s annual net operating income (NOI) and dividing it by the property’s annual debt payment. The DSCR is typically shown as a number followed by x.
DSCR Investment Loan - Eligibility
Income
Your income limits depend on your geographical area. Some areas do not have income limits.
Credit Score
Applicant should have the bank specified credit score beginning at 640 +
DSCR
The higher your DSCR, the more income you have to pay off your debt.
Features of DSCR Investment Loan
More likely to qualify for a loan
More likely to qualify for loan and receive an offer with better terms
Lower Interest Rates
Increases your chances of lower interest rates and a higher borrowing amount
