Real Estate Investors can confidently apply for loans and be qualified based on the Debt Service Coverage Ratio (DSCR) of the property and not the full Debt to Income Ratio. This means the property’s rental income must be .85% or more of the total mortgage payment. This results in less paperwork, less hassle, and a faster closing.
How to calculate the DSCR ratio:
DSCR = Rent / Proposed PITIA
DEBT SERVICE COVERAGE RATIO EXAMPLE
Purchase, Rate/Term Refinance, or Cash Out:
• Gross Rent = $3,000
• DSCR = 1.00%
• $3,000 divided by 1.00 = $3,000
• PITIA may not exceed $3,000.00 per month
• Gross Rent = $3,000
• DSCR = 0.85% (CA only)
• $3,000 divided by 0.85% = $3,529.41
• PITIA may not exceed $ 3,529.41 per month
We also offer no-ratio lending for those investors that are not able to or don't want to document the rental income.
We know that entrepreneurship doesn't happen overnight, and we offer several special programs. Contact Rocklin Mortgage Brokers to learn about your DSCR and No Ratio investment property options.
