Eligibility for DSCR loans is based on verifying the rental property's income, not your personal income, tax returns and pay stubs. Conventional loans rely on your income to support extra loan payments - so after a couple of properties, you max out your ability to borrow (unless you earn squillions). That's where DSCR loans come in. But while DSCR loans have advantages, rates are slightly higher so if your income isn't maxed with other properties, a conventional loan might be better. We can help you decide.
DSCR requires a higher down payment than other investment loan programs. Typically your down payment can be as low as 15% to 20% but it's based on your credit score and the Coverage Ratio (see below). Down payment funds cannot be a loan or gift and must come from verified sources.
The Coverage Ratio for DSCR loans are very important. Most programs require a 1.0 but some may require a 1.25. What does that mean? It means the properties rental income must cover 100% of the mortgage payment or 125% of the mortgage payment. Let's say your mortgage payment is $2,000 a month and you are buying a 2 unit property. That means the units need to rent for a min of $2,000 a month at 1.00 or $2,500 at 1.25.
No personal income information is required on DSCR loans!
As you can see, DSCR loans are a great option for investors looking to expand their portfolio. If you would like more information, please call me at 352-446-9422 or email me at rick.scherer@planethomelending.com. If you would like to get pre-approved, you can apply now.
This tool helps you determine the potential purchase price of a home you may qualify for with the information you provide. This is an estimate only and we do not guarantee these results and this is not a committment to lend. This is not a pre-qualification or pre-approval. All information entered must be verified and is subject to credit approval.
As a W2 employee, please use your gross income. If you have earned Overtime, Bonus, Commission or Tips for at least 1 year, that income can be included also. You may also include any additional income like SSA, Child Support, Alimony, etc if the income can be verified.
As someone that is Self-Employed, we use your net taxable income for the last 2 years. Depending on your business, it might be on a schedule C, form 1120S, form 1065 or form 1120. Gross income cannot be used on most loan programs. If you would like to inquiry about non traditional programs, please email us at rick.scherer@planethomelending.com
Being Retired, you can use income from any verifiable source like Social Security, Retirement, Pension, IRA Distributions, Annuities, etc. Income that is not taxed may also be grossed up 15-25% in most cases. Please include all verifiable income sources in the amount.
Monthly debts are installment (auto, personal, student, etc) or revolving debts (credit cards, lines of credit, etc). Do not include rent, utilities, phone, insurance, etc.
Mortgage companies use FICO scores 2,4 & 5 with the 3 major credit companies. Your qualifying score would be the middle score (throw out the highest and lowest scores).
*By submitting this request, you acknowledge this is only an estimate and Planet Home Lending does not guarantee the results. To be used for information purposes only. This is not a commitment to lend. An application and supporting documentation is required for approval of any advertise loan terms. Equal credit opportunity. Please contact us at (352) 446-9422 with any questions or concerns.
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