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It’s finally possible for self-employed borrowers or independent contractors who have difficulty documenting their income to actually get a stated income loan to buy a non-occupant property for investment purposes.
The “debt-service-coverage” loan program helps these investors, house flippers and landlords who have multiple expense write-offs on their tax returns to buy investment properties without having to document their income.
The new option – use the anticipated monthly rent as income to qualify for the loan.
No Income Stated or Verified
If you have been aggressive with deductions on your tax return but have adequate cash flow, this type of loan may be for you.
The debt coverage ratio measures the ability to pay the property’s monthly mortgage payments from the cash generated from renting the property.
Lenders use this ratio as a guide to help them understand whether the property will generate enough cash to pay the mortgage expense.
The debt coverage ratio is calculated by dividing the property’s month net operating income (NOI) by a property’s monthly debt service. The monthly debt service is the total of the mortgage principal and interest payment, taxes, insurance, and any HOA fees.
Investors can qualify if the net operating income from the property is equal to or greater than 1.0 times the monthly debt service.
So, if you have a property that can generate $2,000 per month in rent, investors can qualify with an “all-in” mortgage payment of $2,000!
Debt Service Coverage Ratio (DSCR) Investor Loan
- Loan-To-Values up to 80%
- Credit Score down to 600
- Qualification based upon cash flow of subject property
- Interest only option available
- 5/1, 7/1, and 30-year fixed options available
Non-Owner Occupied and Investment Purposes Only
This is only for Non Owner Occupied properties for investment purposes. You will be required to sign a statement that states you live in another property that you own.
Please do contact Tom Bonetto for more specific information regarding qualification!
Here’s the link to the article: https://lendingcoach.net/debt-service-coverage/