Please find the list of the most common DSCR Loan FAQs. Have a question? just submit the Quick Form here.
Question: What does DSCR stand for? Kerry H – Naples, FL
Answer: DSCR is “Debt Service Coverage Ratio” Basically investors are qualified based on the coverage ratio (cash-flow) of the rental property.
Question: How is the monthly rent amount determined for a vacant home not currently rented? Clarence. L – Key West, FL
Answer: During the appraisal process the appraiser will be required to provide a Fannie Mae Market Rent Analysis 1007 Form. This shows the comparable market rents in the area.
Question: I want to purchase an investment home that will be used for an Airbnb rental. Is this permitted? Alan.M – Daytona Beach, FL
Answer: For sure, DSCR cash flow loans for short-term rentals like Airbnb or VRBO are allowed.
Question: How much down payment will I need to put down for an Airbnb rental? Can I do 100% financing for a DSCR loan? Rachelle. J – Gainesville, FL
Answer: No, DSCR purchase loans will require a minimum 20% down payment in most cases.
Question: Once closed, would the DSCR loan be reported on my individual credit report? Savannah, P – St. Augustine, FL
Answer: No, if closing in an LLC for all options. For those closing in individual name, there are also limited options depending on the loan structure.
Question: I have a short-term hard money loan on a house I purchased to rehab and then rent. The loan needs to be satisfied in June 2024, right about the time we are finished with the renovations. I need to refinance into a permanent loan, can I use the DSCR program? Jay. B – Atlanta, GA
Answer: Yes, a hard money refinance into a DSCR loan is allowed. The terms and loan-to-value restrictions will depend on whether you decide to cash out to just a standard rate/term refinance. Generally speaking, 80% for rate-term and 75% for cash-out refinance.
Question: How long is the prepayment penalty on a DSCR loan? Natalie E – West Palm Beach, FL
Answer: The pre-payment penalty is generally 2-4 years for standard DSCR loans depending on the lender and many other variables. Many times investors will have the option to buy down their prepayment penalty even lower if they choose. Investors that meet stronger qualifying requirements have NO pre-payment penalty options available.
Question: I have a rehab project completed with a new appraisal done. What is the current limit to cash out refi? Stephen C – Orlando, FL
Answer: Generally the DSCR cash-out refinance limit is 75%. However, lending guidelines have been rapidly changing in recent months, so be sure to connect with us for the latest updates.
Question: I plan to purchase a rental property in Naples with a 30% down payment. I will be receiving a gift for the down payment funds, is this permitted? Jose, H – Tampa, FL
Answer: You will need to put 5% of your own funds down, the rest can come from a gift.
Question: Will I be required to do a long-term fix rate loan? Caroline L – Destin, FL
Answer: Many long-term fix rates and adjustable rate 3/1 -5/1 -7/1 terms available with interest-only options.