Debt-Service Conversion Ratio (Investors)

Debt Service Coverage Ratio (DSCR) loans are designed for real estate investors, focusing on a property’s cash flow rather than the borrower’s personal income. These loans use the ratio of a property’s annual net operating income to its total debt service to determine eligibility. A DSCR of 1.0 or higher typically indicates that the property generates enough income to cover its debts, making it an attractive investment. DSCR loans offer flexibility for investors who may not qualify for traditional mortgages due to income requirements. They allow investors to expand their portfolios based on the potential of the investment property itself. With their unique qualification criteria, DSCR loans provide a valuable tool for real estate investors seeking to grow their wealth.