Debt Service Coverage Ratio (DSCR) is a metric used to evaluate the subject property's gross rental income to the property's monthly mortgage payment. When obtaining financing, DSCR is a key indicator to determine if there is enough cash flow to repay the debt.
With Champion Funding's DSCR loan programs, investors can use the property's income to qualify, rather than the borrower's personal finances.
When the property is cash-flowing, it is important to keep in mind that there are three various ways of calculating the DSCR.
How to Calculate INTEREST ONLY DSCR
Example: $6,000 monthly gross rent income
$4,800 monthly ITIA = 1.25 DSCR
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* Gross Rents are the lower of either the actual rents from lease agreements or Fannie Mae Form 1007/1025 from the property appraisal. If the lease agreement reflects higher rents than Form 1007/1025 the lease amount may be used for gross rents if two (2) months’ proof of receipts is verified.
**PITIA – Principal and Interest payment amortized over the scheduled term. Interest Only – ITIA.
No Ratio = No Minimum DSCR
DSCR No Ratio Loan Options Available
We have options to qualify your DSCR loans regardless of the ratio. Whether its greater than 1, between .75 and .99, or even below .75, we have a route to help get your borrower to the closing table! Qualifying for this loan type doesn't rely on the borrowers to disclose their debts or income (no DTI calculations required).
Qualify your borrowers using the earning potential of their property instead of their personal income.
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