DSCR loans vs Conventional

[Batool Hussain]

I am closing on my first property using FHA, interested in buying a 2nd property.

What other financing options can I use?

DSCR? What are the pros and cons ?

Any other financing options ?

[Tim Roberts]

The DSCR loans are based on the property itself and the cash flow it creates. This loan does not look at your income or your debt to qualify you. The cash flow needs equal the monthly mortgage payments or be better. Based on the higher interest rates you most likely will need more money down to make the property cash flow correctly. Downside to these loans are higher interest rates than traditional lending and prepayment penalties that lock you into the loan for several years. This can limit your ability to refinance if/when interest rates go down to improve future cash flow.

There are good reasons to use this loan program but it may be better to get with a Loan Officer and share your long term goals in building your real estate investment portfolio. There are other ways to finance properties depending on your risk tolerance.