What DSCR measures
Debt-service coverage ratio compares a property’s qualifying income with its annual debt obligations. A ratio above 1.00 generally means income exceeds debt service, although lender requirements vary.
Why investors use DSCR financing
DSCR programs can emphasize property performance rather than relying only on traditional personal-income documentation. Exact documentation, reserves, credit requirements, and allowable property types vary by program.
Prepare before applying
- Know expected rent and operating expenses.
- Estimate taxes, insurance, association dues, and debt service.
- Review credit, liquidity, reserves, and property condition.
- Confirm whether the property and occupancy type fit the program.