Using rental income only to qualify for a mortgage
A DSCR loan (Debt-Service Coverage Ratio loan) is a type of real estate investment loan primarily used for income-producing properties. It evaluates a borrower’s ability to repay the loan based on the cash flow generated by the property rather than the borrower’s personal income or credit score. Here’s a breakdown of how it works:
1. Debt-Service Coverage Ratio (DSCR)
Formula:
DSCR
=
Net Operating Income (NOI)
Total Debt Service (TDS)
DSCR=
Total Debt Service (TDS)
Net Operating Income (NOI)
Net Operating Income (NOI): The property’s income after deducting all operating expenses, such as…
The skinny
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