DSCR Loan North Carolina
- LTV: 80%
- Term: 30 Year
- Rate: 7.65%
- Points: 1.5%
What are DSCR Loans used for in North Carolina?
What are dscr loans used for in North Carolina?
DSCR loans are a powerful financing tool for real estate investors in North Carolina, allowing them to qualify for loans based on the rental income potential of the property rather than personal income.
These loans use the Debt Service Coverage Ratio (DSCR)—a calculation comparing rental income to property expenses to determine eligibility and loan amounts.
In North Carolina, where rental demand is strong, DSCR loans are commonly used to finance long-term rental properties, short-term vacation rentals, and multi-unit buildings.
For those following the BRRRR investing strategy, DSCR loans are ideal for refinancing after stabilizing a property. This strategy allows investors to build a portfolio of rental properties while preserving capital for future projects.
If you're considering investing in Airbnb rentals, DSCR loans can also help finance short-term rentals in North Carolina's high-demand business rental markets. Learn more in our guide: Financing Airbnb Rentals with DSCR Loans.
To understand how to calculate DSCR and determine your eligibility, visit the How to Calculate DSCR section of this page.
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DSCR loans are a powerful financing tool for real estate investors in North Carolina, allowing them to qualify for loans based on the rental income potential of the property rather than personal income.
These loans use the Debt Service Coverage Ratio (DSCR)—a calculation comparing rental income to property expenses to determine eligibility and loan amounts.
In North Carolina, where rental demand is strong, DSCR loans are commonly used to finance long-term rental properties, short-term vacation rentals, and multi-unit buildings.
For those following the BRRRR investing strategy, DSCR loans are ideal for refinancing after stabilizing a property. This strategy allows investors to build a portfolio of rental properties while preserving capital for future projects.
If you're considering investing in Airbnb rentals, DSCR loans can also help finance short-term rentals in North Carolina's high-demand business rental markets. Learn more in our guide: Financing Airbnb Rentals with DSCR Loans.
To understand how to calculate DSCR and determine your eligibility, visit the How to Calculate DSCR section of this page.
North Carolina DSCR Loan Products
Low Rates, from 1.0% Origination for long term & short term rentals in North Carolina.
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Long Term Rental
DCSR Loans North Carolina
Rates from 6.75%
LTV Up To 80%
From 1.0% Origination Points
Minimum DSCR: 1.0
Closing Time 14 Days
Appraisal Required
Minimum Credit Score: 660
Property Condition C4 Required
Purchase, Refinance, and Cash Out Available
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Short Term Rental
DCSR Loans North Carolina
Rates from 6.95%
LTV Up To 80%
1-2% Origination Points
Minimum DSCR: 1.0
Closing Time 21 Days
Appraisal Required & AirDNA Check
Minimum Credit Score: 680
Property Condition C4 Required
Purchase, Refinance, Cash Out Available
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How To Determine DSCR For North Carolina Rental Properties?
The Debt Service Coverage Ratio (DSCR) is calculated by dividing the monthly rent of the property by the monthly loan payment (principal + Interest), taxes, insurance and association fees (PITIA).
DSCR = Rent/PITIA
The basis of a DSCR loan in North Carolina, is that the rent you collect from tenants leasing the property should be greater than the cost to own and operate the property.
Investment purpose rental properties with a DSCR greater than 1.0 are called “cash flowing”. You can calculate the DSCR of your rental property with our DSCR Loan Calculator.
(DSCR Evaluation)
Property Value: $474,000
Loan: $379,200
Interest Rate: 7.25%
Ammortization: 30 YR (FRM)
Monthly Rent: $3,995
P&I Payment: $2,586.81
Monthly Taxes: $400.00
Monthly Insurance: $180
Monthly HOA: $0
DSCR 1.26
North Carolina DScr Loan process
Ridge Street closes North Carolina DSCR loans in 14-21 days.
Apply Or Get Pre-Approved Online
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Receive your term sheet
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Submit Docs
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Appraisal or BPO
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Closing
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When To Use a DSCR Loan?
DSCR loans are used by investors to "hold" real estate. These loans are long term and amortizing. This allows investors to continuously gain equity in their property while generating monthly cashflow.
Investors either use DSCR loans when purchasing a property or when refinancing it. The BRRRR Investing Strategy is popular among investors in which the DSCR loan is used to "cash out" the property.
Benefits Of DSCR LoanS Compared To Other Loan Types
Other benefits of DSCR loans include:
- No income verification
- Can be used for long term and short term rentals (Financing Airbnb's for example)
- Cost Effective
Best Rental Markets In North Carolina For DSCR Loans
North Carolina hosts a dynamic rental market with strong demand driven by population growth, a thriving economy, and a mix of urban and vacation destinations. Cities like Charlotte, Raleigh, and Durham attract long-term renters with robust job markets, while the state’s coastal and mountain regions provide opportunities for short-term vacation rentals. Investors can use DSCR loans to leverage rental income and capitalize on these opportunities. In the sections below, we’ll take a closer look at the rental markets in North Carolina’s key cities and what makes them stand out for real estate investors.
Charlotte, NC
Charlotte’s rental market is an excellent choice for long-term investors, fueled by its rapid population growth, thriving financial sector, and diverse economy. Known as a major banking hub, the city attracts a steady influx of professionals and families seeking quality rental housing in neighborhoods like South End and Uptown. Long-term rentals dominate the market, providing reliable cash flow and opportunities for appreciation. DSCR loans are particularly well-suited for Charlotte, enabling investors to acquire cash-flowing properties using rental income to qualify. With its combination of affordability and high rental demand, Charlotte is a prime market for building a sustainable investment portfolio.
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Raleigh, NC
Raleigh’s rental market is another strong contender for long-term investments, driven by its booming economy, growing population, and status as a major hub for tech and education. The city attracts professionals, students, and families, ensuring steady demand for long-term rentals in areas like North Hills and Downtown. While short-term rentals may perform well in select areas, Raleigh’s consistent tenant base and stable rental rates make long-term rentals a more reliable choice. DSCR loans are an excellent option for investors in Raleigh, allowing them to leverage rental income for financing and secure properties in this high-growth, cash-flow-friendly market.
North Carolina DSCR Loan FAQ’s
How can I Improve the DSCR of my property?
- Increase Your Down Payment. By Increasing your down payment your loan amount will go down and your DSCR will increase. If you’re struggling to improve your DSCR past 1.0, increasing your down payment is an option you may have to consider.
- Ask Your Lender About A Rate Buy Down. Some lenders, including Ridge Street, allow you to pay an additional fee at closing in exchange for a lower rate. In some cases, a rate buydown will allow you lower your DSCR without increasing your overall cash required to close.
- Push For Less Expensive Insurance. Ask your insurance broker if there is anything they can do to lower your policy fee. A lower insurance policy fee will increase your DSCR.
Could I use a DSCR loan if I have to renovate a property?
You can start by getting a short term fix and flip loan to renovate the property and then refinance the property with a DSCR loan. The strategy of buy, rehab, rent, refinance, and repeating is called The BRRRR Strategy.
Can I use a DSCR loan on a Vacation property?
Absolutely! This is one of the main use cases for a DSCR loan.
What loan amounts can I get for a DSCR loan?
Between $50K and $2M. As long as a the DSCR is greater than 1.0, Ridge Street will lend on it.
Are DSCR loans only for investment properties?
Yes. If you are buying a piece of real estate which you intend to live in, then you would not qualify for a DSCR loan.
For refinances and cash outs, does the property have to be rented?
The short answer is no. We understand that investors who fix and refinance properties intend to refinance as soon as possible after renovating a property.
This said, providing a DSCR loan on a rental property that is not rented is higher risk. We'll want to see that the market you are in is very "rentable" at the market rent for your property. We will not provide a DSCR loan on a rental property that has been listed for rent for 3 months with no bites, for example.
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How to Get A DSCR Loan In North Carolina with Ridge Street?
Ridge Street is the #1 DSCR Rental Property Lender in North Carolina. We pride ourselves on fast closings and fairly priced loans. Get approved for your next project today.
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