Thoughts on DSCR Loans

[Tim Melin]

Any experience with DSCR funding. Looking for the pro/cons for a new investor

[Alex Breshears]

Hi Tim! Welcome to real estate investing! Now DSCR loans are loans that are looking primarily at the asset to pay for the liability of the mortgage. They are termed Debt Service Coverage Ratio. For investment properties, they are looking at the amount of income generated compared to the debt service on the loan. Right now, their interest rates are really high. There is a lot of uncertainty in the market for institutional capital, which funds a lot of these types of loans. For investment property, I would say commonly you are going to have 80% to 75% LTV. They may or may not require underwriting on you as a person, including credit checks, asset levels, etc. On the plus side, if the property cash flows with a DSCR loan, when it comes time to refinance time with a lower rate it will improve on cash flow lol. This is generally going to be a loan product for a long term buy and hold property.