Gold Bridge Capital Solutions DSCR Loans

DSCR Loan Explained

June 30, 2022

Gabriela Rosales

This blog will layout the main key factors of a DCSR loan and how you as an investor can use this for your future projects.

As a real estate investor, you can avoid high rates and high points of private loans, lengthy approval processes, and strict lending criteria with a debt service coverage ratio loan, which is a type of no-income loan. Qualify for a loan based on your property’s cash flow, not your income.

Securing a debt service coverage ratio loan can help you expand your investment portfolio much easier and faster when done with the right lenders. For more information you can call Gold Bridge Capital Solutions at 916-236-5075 or 855-501-8725.

Gold Bridge Capital Solutions DSCR Loans

What Is a Debt Service Coverage Loan?

A DSCR loan is a type of non-QM loan for real estate investors. Lenders use a DSCR to help qualify real estate investors for a loan because it can easily determine the borrower’s ability to repay without verifying income.

How Does a DSCR Loan Work?

Because real estate investors write off expenses on their properties, some may not qualify for a conventional loan. The debt service coverage ratio loan allows these individuals to qualify more easily because they don’t require proof of income via tax returns or pay stubs that investors either don’t have or that don’t represent their true income due to write-offs and business deductions.

What are the benefits of a DSCR Loan?

  • Potentially quicker closing times
  • No income or job history verification required
  • No limit on the number of properties
  • Loan amounts up to $5,000,000
  • Unlimited cash out
  • As little as 20% on down payments
  • Minimum credit score required
  • Interest-only loan option available
  • Suited for new and seasoned real estate investors
  • Both long-term and short-term rentals are eligible (Airbnb, VRBO, etc.)
  • No reserves required on cashout loans, 6 months required on all other loans unless the DSCR ratio is less than 1.

Frequently Asked Questions

Do you need a down payment for a DSCR loan?

Most Lenders will expect you to be able to make a minimum 20% down payment

Is a DSCR loan a commercial loan?

Historically these loans only applied to commercial properties but recently asset-based lenders have started using these loan as a way to underwrite and approve loans for 1 to 4 unit residential investment properties.

What is the minimum FICO score required for any of our investors for a DSCR loan?

The minimum credit score required for a DSCR mortgage varies depending on the lender and other factors but is typically 640, which is similar to the score required for a standard investment property loan.

How is DSCR calculated?

DSCR is calculated by dividing net operating income by total debt service. Total debt service includes interest and principal on a company’s lease, interest, principal, and sinking fund payments. Click HERE > to Read More About How To Calculate Your DSCR Ratio.

How do I use DSCR to calculate my loan?

The DSCR is calculated by taking the net cash flow divided by the annual debt-service payments at the requested loan amount. If the net cash flow is insufficient to cover the requested loan at the target DSCR, then the loan amount will be constrained by the minimum DSCR. Click HERE > to Read More About How To Calculate Your DSCR Ratio.

Does a DSCR loan need appraisal?

If you are seeking a DSCR loan to purchase property an appraisal with rental survey is ordered. The rental survey tells the lender how much rent is to be expected based on rental comparables. To use for a refinance will also require an appraisal with rental survey.

Think You Want To Inquire In a loan? Contact us Today for more questions or concerns.

Gold Bridge Capital Solutions

P: 916-236-5075 or 855-501-8725

E: info@goldbridgecs.com

Start the Application Process and let us get you the loan you need > https://app.loantuitive.com/goldbridgecs

Can the recent “BIG” win for Sacramento FC Professional Soccer team be a push for their new stadium?

It all started with a WIN An exciting and historical win for the local Sacramento Professional Mens Soccer Team. The Sacramento Republic FC is moving on in the U.S. Open Cup after beating another California MLS team this past week. They have beaten the San Jose...

Equipment Loans in Detail

What is an Equipment Loan? Equipment loans are used to purchase business-related equipment, such as a restaurant oven, Long-Haul Trucks/vehicles or Heavy Duty Office machinery. As long as, it is essential for the business to run its daily functions. When you take out...

Commercial Hard Money Loans

What are Commercial Hard Money Loans? Commercial Hard Money loans are a Capital Source offered by Private Lenders to investors who need financing fast. The criteria to qualify are more flexible compared to traditional financing with a higher interest rate in return....

Proper Documentation for a Hard Money Loan

While a Hard Money Lender’s requirements may vary, there are standard loan documents associated with every transaction. Typical loan documents include, but are not limited to: Letter of Intent (LOI): The LOI is essentially a formal document that acknowledges all of...

DSCR Ratio & How To Calculate It

This Blog will explain why a DSCR loan can benefit an investor and knowing how to calculate your DSCR Ratio, can help you figure out if a Debt Service Coverage Rate Loan is right for you. Why use a DSCR Loan? Most real estate investors write off expenses on their...

Rail Yards Development Plan?

This blog will review the prospected plan of the Rail Yards in Sacramento, CA. Finally in the Spotlight Probably one of the most exciting projects happening in Sacramento, CA. If you are a local historian you know what the Rail Yards are. You can see them going over...

House Flippers might get taxed up to 25% in California

A new bill that would massively tax house flippers and speculators who buy and sell a house within three years was moved to the Assembly Committee on Revenue and Taxation. The Assembly Bill 1771, authored by Assemblyman Chris Ward (D-San Diego), would impose a 25% tax...

Medley Apartments Becoming Our Neighbor

Medley Apartments complex in Natomas, Sacramento When we moved into our new offices April Last year at 4142 E. Commerce Way. This plot of land was still empty and the news was unknown for what it was going to become. Early March 2022 we finally saw some movement and...

Reflections on how the Pandemic Affected CRE Property Types?

Today we want to go over the real question. What does CRE property looks like today after the results of the Pandemic? These results are US based off of research for the trending market and statistics. As well as, our own intuitive of where we think the different CRE...

What is the difference between Private Money and Hard Money?

Why an investor should know the key factors between Private and Hard money loans. As it can benefit your future investment projects and who you decide to go for a loan from. Private Money Lending Involves borrowing money from people with the money to invest capital in...