What It Does: Compares estimated rental income against estimated mortgage payment to help you determine if this particular property will qualify for a DSCR loan.

Where do I get the rent amount: Talk to your realtor or go to a website such as zillow and see if you can get an idea of market rents.  For your loan approval we will compare the current rents (if it is a rental today) compared to the appraisers estimate of rent.  We will use the higher of the 2 as long as we can prove at least 2 months of rent receipt (if rents are higher) up to 120% of the lower number. (contact me if you want to discuss this further.

DSCR = 1.0: Rents exactly cover the mortgage (100% coverage), which is the minimum preferred level (because who really wants to have a rental property where you have negative cash flow?).

Higher DSCR: Indicates extra income and a better financial cushion.  When your DSCR is over 1.25 there is a good chance you qualify for better terms (even lower rate or fee).

Lower DSCR: Means a shortfall; financing may come with higher interest rates, fees, and potential pre-payment penalties.

Options to Boost DSCR: 
 -Put a larger down payment
-Add or increase the term of your pre-payment agreement which will give you better rates and lower payments.
-Buydown the interest rate (call me to discuss current rates and buydown options as the default rate is unlikely to be your current rate)
-Consider interest-only payments or a 40-year term (instead of 30 years), though these may carry higher rates or fees.

Interest Rate Estimate: DSCR rates can range from 6.5% to 9.5% depending on qualifications and are finalized about a week before closing escrow.  The default rate is just a ballpark, contact us for the most current rate quote.