What is DSCR financing?

[Muhammad Amawi]

Hey BP!

Seeing this is mainly an investor forum, I thought I'd shed some light on what is probably the most utilized investor product: DSCR.

DSCR, for those that don't know, stands for Debt Service Cover Ratio. What it does is it allows you to qualify based off of your FICO and what the property brings back in income.

So if a DSCR qualification had to be greater than or equal to 1 (1:1 ratio) that would mean if the mortgage you qualify for is $1,000 a month, then the property would have to bring back $1,000 in rental income.

DSCR works for cash out refi's, rate and term refi's as well as purchases. The property can be leased or unleased and there are opportunities to use this in a personal name or LLC.

Hope this helps!