DSCR Loans

A Debt Service Coverage Ratio (DSCR) loan is designed specifically for real estate investors purchasing rental properties. Unlike traditional loans, DSCR loans focus primarily on the property's ability to generate sufficient rental income to cover debt payments—rather than relying on the borrower's personal income.

How DSCR is Calculated:

DSCR (Debt Service Coverage Ratio) = Net Operating Income (NOI) divided by Total Debt Service (monthly mortgage payment)

A DSCR above 1.0 indicates the property's income fully covers debt payments, with lenders typically preferring a ratio of 1.20 or higher.

Typical Costs and Fees:

• Loan-to-Value (LTV): Usually up to 75-80%

• Interest Rates: Typically range between 6.5% to 9%

• Loan Terms: Often 30-year fixed or adjustable-rate options available

• Closing Costs and Fees: Typically around 2-4% of the loan amount

At FlipSmart Loans, we've been on both sides of the investment equation. We know what matters to investors, and we're here to make rental financing straightforward and transparent.