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Investor Debt Service Coverage Loan

Debt Service Coverage Ratio (DSCR) is a calculation that helps us determine if a rental investment is generating enough income to make its loan payment obligations.  The gross monthly income must cover the subject property *Principal, Interest, Tax, Insurance & Association payment (PITIA).  No need to verify personal or business income, No tax returns.  

DSCR is calculated by the following simple formula:  
  • DSCR = Monthly Gross Income

Required documentation:

  • Application, completed by borrower
  • 2 months bank statement
  • A list of properties you currently own (a REO Schedule)
  • No Tax Returns Required
  • Lease(s) – (if currently rented) or Appraisal Operating Income Statement
  • Sales Contract (on purchase)
  • LLC Operating Agreement or Articles of Corporations
  • Driver’s License
  • Other documents and/or materials may be requested based on the individual borrower’s circumstances and collateral.

    Eligible borrowers:
  • Citizens / US persons and foreign borrowers permitted, LLCs and Corporations organized in one of the fifty states or the District of Columbia
  • Minimum debt service coverage ratio: 100 - 115% of PITIA
  • Minimum credit score: 650
  • No foreclosure, bankruptcy, deed in lieu or short sale permitted in the past 24 months.
  • If foreclosure, bankruptcy, deed in lieu or short sale between 24 and 48 months, then max 65% LTV and reserves increased by 6 months. Mortgage and Rental History: maximum 1 x 30 x 12 with 0 x 30 in the last 6 months from Note DateAcceptable occupancy:
   Investment properties (For investment / business purpose)
  • Borrowers must sign a business use affidavit)
   Acceptable property types:
  • 1-4 units, warrantable / non-warrantable condo.
  • Condotels not permitted.
    Required reserves:
  • 6 months PITIA for loan amount <$2MM; 12 months PITIA for loan amount ≥ $2MM
  • Acceptable states: All 50 states and DC (US Territories not permitted). Wholesale; verify currently licensed states 

Other Information:

ARM Index - 1-yr LIBOR;

Margins – investor-occupied 5.25%;

Caps – 2% initial, 2% each year and 5% lifetime;

Floor (lifetime minimum rate) - is initial note rate. 3-yr prepayment penalty required for investor occupancy / business purpose loans where permitted by law;

Pre Payment Penalty buyouts may be available.

Loan amounts and loan to value limits:
Investment / Business Purpose / Purchase and Rate & Term Refinance 1-4 unit, 
Condo 

(example based on 720 min credit score)

  • 70% to $1,000,000
  • 65% to $2,000,000
  • 55% to $2,500,000
  • 50% to $3,000,000 Investment / Business Purpose Cash-out Re-fi (example based on 720 min credit score) 55% to $2,000,000 50% to $3,000,000
  • Loans to one or more foreign borrowers are limited to 60% LTV and $2,500,000 Loan Amount
Call us at 908-722-9217 to discuss your investment property loan scenario or complete the inquiry form and we contact you.
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