A debt service coverage ratio (DSCR) loan is a mortgage loan for residential income-producing properties. DSCR loans are also known as investor cash flow loans.
DSCR loans are based on the cash flow of the property, rather than the borrower’s income. This means that borrowers don’t need to verify their personal credit or financials.
DSCR loans are often used by real estate investors to qualify for mortgages and buy investment properties. Investors may consider a DSCR loan if they are looking to purchase vacation rentals, multifamily homes, or investment properties.
DSCR loans strictly do not allow the owner of the property to live in the property, it must be used for “business” or investment purposes. Includes use of “cash-out proceeds”