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NMLS# 243348
Full-Service Loan Originators
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INVESTOR LOANS /
(DSCR)
DEBT SERVICE COVERAGE RATIO LOANS
DEBT SERVICE COVERAGE RATIO (DSCR) LOANS
Use Rental Income to Qualify for Investment Properties
A DSCR loan enables real estate investors to obtain financing based on a property's rental income instead of their personal income. If you're unable to qualify for a traditional loan, DSCR loans offer an excellent alternative.
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Accessible for real estate investors
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Unlimited Cash Out
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No Limit on the number of properties
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All types or rentals are eligible
Qualify for a Home Loan WITHOUT using your
Tax Returns with a (DSCR) Debt Service Coverage Ratio Loans program
CLIENT TESTIMONIAL
"They kept us focused and on TOP of our paperwork at all times. Working with Joanna and her team was wonderful.
We recommend her and would use her again in a heartbeat."
Nicole L., Citrus Heights, Sacramento County, Northern California, United States
As a REAL ESTATE INVESTOR, you can bypass the high rates and points associated with private loans, lengthy approval processes, and stringent lending requirements by opting for a
debt service coverage ratio loan, which is a NO-INCOME LOAN.
This allows you to qualify for a loan based on
Cash Flow generated by your Property,
rather than your personal income.
A (DSCR) Debt Service Coverage Ratio Loan allows a borrower to qualify for financing based on the projected rental income of a property rather than personal income.
A (DSCR) Debt Service Coverage Ratio Loan are designed for real estate investors and can only be used to purchase income-generating properties. (DSCR) Debt Service Coverage Ratio Loan can’t be used to buy a primary residence or a fixer-upper.
Obtaining a Debt Service Coverage Ratio (DSCR) loan can simplify the process of expanding your investment portfolio. Continue reading to discover what a DSCR loan is, how it functions, and the requirements associated with it.
What Is the Debt Service Coverage Ratio (DSCR)?
The debt service coverage ratio evaluates a property's yearly gross rental income in relation to its annual mortgage obligations, which encompass principal, interest, insurance, and any applicable HOA fees.
Lenders such as The LOAN Lady HOME LOANS in California utilize (DSCR) Debt Service Coverage Ratio to evaluate the loan amount that can be sustained by the income generated from the property, well as to assess the income coverage at a given loan amount. In calculating DSCR, lenders exclude certain expenses such as:
MANAGEMENT
VACANCY RATE
MAINTENANCE
REPAIRS
UTILITIES
INVESTOR / DSCR LOANS
HOW TO IMPROVE YOUR DEBT SERVICE COVERAGE RATIO LOANS?
Boosting your DSCR before seeking a loan can enhance your likelihood of approval and the loan amount you qualify for. Here are some ways to optimize your DSCR to strengthen your application:
INCREASE RENTAL INCOME
Increase your rental income by enhancing your property’s occupancy rates, adjusting rental prices to align with market trends, or providing additional services and to draw in more tenants. Reduce vacancies by utilizing effective marketing strategies, keeping properties well-maintained to attract and retain tenants, and promptly addressing any tenant concerns or issues.
INCREASE PROPERTY VALUE
Enhance your property with upgrades or renovations to boost its market value, enabling you to charge higher rental rates and improve your financial standing. These improvements can also attract tenants, leading to increased rental income by minimizing vacancies.
REFINANCE EXISTING LOANS
Consider refinancing your current loans to secure lower interest rates and extend repayment terms, and think about an interest-only option. By refinancing your mortgage, you can lower your monthly debt payments enhance your Debt Service Coverage Ratio (DSCR).
MANAGE YOUR EXPENSES
Adopt cost-saving strategies such as upgrading to energy-efficient systems, outsourcing maintenance services, or renegotiating vendor contracts to lower operating costs. Although the lender does not factor in expenses when determining your DSCR, these actions can enhance your overall cash flow.
“If they want to increase their DSCR ratio, investors should consider looking into two to four unit properties. With single family residences, especially if you’re looking at purchase prices over $400,000, meeting the 1:1 ratio can be difficult with 20% down. From my experience, if we’re looking at two, three, and especially four unit properties, those multiple unit properties will DSCR and cash flow a lot better than single family residences. So, if you’re looking at purchase prices over $400,000 and you want to keep your down payment lower, look at the multi-family units.”
Loan Officer
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