DSCR Loan Costs The Key Requirements for a DSCR Loan

What Are the Key Requirements for a DSCR Loan? A DSCR loan (Debt Service Coverage Ratio loan) qualifies a real estate investor based on the rental income a property generates instead of the borrower's personal income. The main DSCR loan costs and requirements are: the interest rate cash reserves a possible prepayment penalty standard property expenses used to calculate the ratio. The DSCR ratio compares a property's monthly rent to its standard expenses, including principal, interest, property taxes, insurance, and any HOA dues. In this video, I cover what investors should expect. 📌 What you'll learn: DSCR Loan Interest Rates: Rates are typically higher than conventional owner-occupied loans because lenders price in investor risk. Credit score, down payment, and the DSCR ratio all affect the rate. Reserve Requirements: Lenders generally require cash reserves after closing, often measured in months of the property's monthly payment. Exact amounts vary by lender. Prepayment Penalties: Many DSCR loans charge a fee for paying off or refinancing early, usually within the first few years. Terms vary by program, so review them before choosing a loan. Understanding DSCR loan costs and requirements up front helps real estate investors compare lenders and avoid surprises at closing. If you're thinking about making a move, we'd love to help you! We can help you navigate the real estate market. Just give us a call, shoot us a text, send us an email, and we'd love to help you make your next move be a great experience! Mike Tanas "Mortgages with Mike Tanas" Mortgage Broker NMLS #2089061