What DSCR ratio do you personally consider ‘safe’?

Question

For investors using DSCR loans, I’m curious about your preferred minimum DSCR.

Do you stick to 1.1, 1.2, etc.?

What ratio gives you peace of mind in today’s rental market?

Mark Munson · Answer

@Michael Santeusanio On DSCR loans, lenders start introducing interest rate reductions at >1.25x DSCR, so that would be a good indicator that threshold is risk mitigating; therefore a good benchmark.

Chris Seveney · Answer

1.25

Quinton Brown · Answer

👉 1.10–1.15 DSCR — The Minimalists

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Jaycee Greene · Answer

@Quinton Brown Sorry, I was asking @Michael Santeusanio more about the components of "Debt Service". With HMLs, it's usually just PITI (plus HOA, if there is one). With banks/CU's, their DS also includes property management, maintenance, etc.

Jaycee Greene · Answer

@Michael Santeusanio Are you using a bank definition of DSCR or that of a hard money lender?

What DSCR ratio do you personally consider ‘safe’?

5 Replies

👉 1.10–1.15 DSCR — The Minimalists

👉 1.10–1.15 DSCR — The Minimalists