No DSCR Minimum

As you search for excellent terms on an investment property loan, you may come across several terms that are not associated with mortgages for owner-occupied residential loans. Debt service coverage ratio, or DSCR, is one of the terms that could be foreign to you. For many commercial loans, the lender needs to confirm that the property is generating enough income to support the mortgage payment, operating expenses and any reserve requirements that the lender has.

Why DSCR-Based Loans May Not Be a Good Fit for You
Many investment properties that have been well-managed and that are in solid markets will easily meet most lenders’ DSCR requirements. However, if your business occupies a portion of the property or if you are getting an amazing deal on a property that currently has low occupancy or below-market rents, the DSCR requirement can quickly become a seemingly insurmountable issue. At MortgageDepot, we offer an investment property loan program that does not have a DSCR requirement.

Other Factors Analyzed in Underwriting
Under this program, the underwriter is not solely requiring on the property’s income to cover all expenses. Instead, the underwriter may take into account one or several other factors. Alternative factors that may be considered include:

• The applicant’s credit scores
• Liquid assets
• Personal debt-to-income-ratio
• Upside potential for a property at full occupancy

In some cases, the loan terms available through a no-DSCR program may differ from a loan program that takes DSCR into account. For example, the no-DSCR program could have:

• A slightly higher interest rate
• A shorter term length
• A balloon payment

Contact Us Today to Learn More
Are you searching for financing for an investment property? Our loan origination team at MortgageDepot has extensive knowledge of investment property loan programs. We are eager to help you get more familiar with the options, so contact us today to learn more.

Get in touch with one of our loan consultants for more information.