DSCR Loan Question

[Donyea Jenkins]

With this loan, do properties have to be "Turn Key" to qualify or can they be used on fixer uppers?

[Jacqueline Wright]

Hi Donyea,

Great question! DSCR (Debt Service Coverage Ratio) loans generally focus on the property's ability to generate enough rental income to cover the debt payment. While turnkey properties are more commonly used for DSCR loans due to their immediate cash flow, fixer-upper properties can still qualify depending on a few factors. DSCR loan guidelines vary from lender to lender. Some may be more flexible and allow properties in need of repair as long as there's a plan to generate rental income. Be sure to check with your lender to confirm their specific criteria regarding the property's condition.

In short, fixer-uppers can qualify for DSCR loans, but the property either needs to be producing rental income or have a plan to do so after renovations. If the property is not yet generating income, you might want to consider other financing options like renovation loans or bridge loans, then refinance into a DSCR loan once it's stabilized.

Hope this helps!