When it comes to obtaining financing for various property types, understanding the loan options available is crucial. One such option is the Debt Service Coverage Ratio (DSCR) loan, which provides a unique solution for borrowers
DSCR Loans
DSCR loans are designed to evaluate the borrower’s ability to generate sufficient income to cover their debt obligations. Unlike traditional loans that primarily focus on credit scores and income, DSCR loans prioritize the property’s cash flow. This makes them an ideal choice for self-employed borrowers or those with non-traditional income sources.
Eligible Property Types
DSCR loans are available for a wide range of property types, allowing borrowers to explore various investment opportunities. Here are the property types that qualify for DSCR loans.
Single Family Residence (Max 80% LTV)
- Ideal for borrowers looking to finance a standalone residential property.
- Maximum loan-to-value (LTV) ratio of 80%
Planned Unit Development (Max 80% LTV)
- Suitable for borrowers interested in financing properties within planned communities.
- Maximum LTV ratio of 80%.
Modular Homes (Max 80% LTV)
- Offers financing options for prefabricated homes.
- Maximum LTV ratio of 80%.
Townhome (Max 80% LTV)
- Provides financing solutions for attached residential units.
- Maximum LTV ratio of 80%.
Warrantable Condo (Max LTV 75%)
- Allows borrowers to finance condominium units that meet specific eligibility criteria.
- Maximum LTV ratio of 75%.
Non-Warrantable Condo (Max LTV 75%)
- Offers financing options for condominium units that do not meet traditional eligibility criteria.
- Maximum LTV ratio of 75%.
Condo Hotel/Condotel (Max 75% LTV)
- Provides financing for properties that operate as a combination of a hotel and a condominium.
- Maximum LTV ratio of 75%.
2-4 Units Residential (Max 75% LTV)
- Allows borrowers to finance multi-unit residential properties.
- Maximum LTV ratio of 75%.
5-8 Units Multi-Family (Max 75% LTV)
- Offers financing options for larger multi-unit residential properties.
- Maximum LTV ratio of 75%.
2-8 Units Mixed-Use (Max 75% LTV)
- Provides financing for properties that combine residential and commercial spaces.
- Maximum LTV ratio of 75%.
DSCR loans present a valuable opportunity for borrowers to secure financing based on the property’s cash flow rather than traditional income qualifications. By understanding the eligible property types, borrowers can explore a wide range of investment opportunities. Whether it’s a single-family residence, a condo hotel, or a mixed-use property, DSCR loans offer flexibility and tailored solutions. If you’re interested in learning more about DSCR loans and how they can benefit you, contact us today for a comprehensive consultation.
