Is A DSCR Loan Right For You?

…Confused?
…Will This Loan Work For Your Situation?
…How Long Will It Take?

Hello! I’m Bill Halick a mortgage loan officer and educator at Aceland Mortgage, and I’d be happy to explain what a DSCR loan is, how it works, and why our experienced team is the best choice for obtaining one.

What Is A DSCR Loan?

• Debt Service Coverage Ratio (DSCR) loans are a type of financing that is commonly used by businesses and individuals to borrow money for various purposes, in our case we would mean specifically for investment real estate properties. The DSCR is a key metric that lenders use to determine the creditworthiness of a borrower and their ability to repay the loan.

How Is The DSCR Calculated?

• The DSCR is calculated by dividing the net operating income (NOI) of a property or business by the annual debt service, which is the total amount of money required to pay off the loan. For example, if a business has an NOI of $100,000 and an annual debt service of $75,000, its DSCR would be 1.33. This means that the business generates enough income to cover its debt payments 1.33 times over.

What Is Required For Loan Approval?

• Our guidelines typically require a minimum DSCR of 1.2 to 1.5 for a loan to be approved. This means that the borrower must have a sufficient amount of income to cover their debt payments, with some extra room for cushion. However, with our wide array of underwriting options – we can even do DSCR loans with a coverage ratio as low as 0% (a vacant property – because we can underwrite based on what the market rents of the unit would be if the property were rented in the future.)

ARRRR strategy (Acquire, Renovate, Rent, Refinance, Repeat)

• DSCR loans are often employed with the ARRRR strategy (Acquire, Renovate, Rent, Refinance, Repeat) for building a real estate portfolio. We have been helping our clients do this for almost 20 years to achieve their real estate financing goals.  To learn more, reach out to Bill Halick or one of our other mortgage professionals to learn all the ins-and-outs of DSCR financing today!
• Here is the simple formula: DSCR = Net Operating Income (NOI) / Total Debt Service

What States Can We Do DSCR Loans In?

• Aceland can handle your DSCR loan in any US State. Most of our DSCR loans lately have taken place in New Jersey, Pennsylvania, Connecticut, Texas, Florida, and California.

Now, let me explain why Aceland Mortgage is the best choice for your DSCR loan:

Expertise: Our experienced team of mortgage loan officers is well-versed in the intricacies of DSCR loans, and we stay up to date on the latest industry trends and regulations. This ensures that we can provide you with the most accurate and relevant information to help you make informed decisions.

Customized solutions: At Aceland Mortgage, we understand that every borrower’s situation is unique. We take the time to understand your financial goals and property investment strategy, and we tailor our loan products to meet your specific needs.

Competitive rates and terms: We work with a diverse network of lenders to offer competitive interest rates and flexible terms on our DSCR loans. This ensures that you receive the most favorable financing options available.

Exceptional customer service: Our team is committed to providing excellent customer service at every step of the loan process. We pride ourselves on our responsiveness and attentiveness to our clients’ needs, and we work tirelessly to ensure a smooth and hassle-free experience.

In summary, a DSCR loan is a type of mortgage that focuses on the property’s income-generating potential rather than the borrower’s personal income or credit history. By choosing Aceland Mortgage for your DSCR loan needs, you can take advantage of our expertise, customized solutions, competitive rates, and exceptional customer service. We look forward to helping you achieve your property investment goals!