DSCR Loans

Real Estate Investors use DSCR loans to leverage investment property rental income to secure financing. This Debt Service Coverage Ratio (DSCR) loan determines the loan amount by calculating the ratio of rental income to the cost to own and operate the property. Investors can use DSCR Loans to purchase, refinance, and cash out rental properties on 30 YR Terms at low interest rates. DSCR Loans can be used for various property types including: single-family, multi-family, and commercial properties. Lastly, the main requirements for a DSCR loan are that the property be owned by an entity (LLC or Corp), that the owner have a 660+ credit score, and the property has a DSCR of 1.0 or higher.

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

You can use Ridge Street’s DSCR Calculator for your project.

Ridge Street’s DSCR Loan rate follow the 5YR US Treasury Note. The DSCR Loan Rate is 5YR US Treasury Note + 3%. In 2024, DSCR Loan rates have been in the 6.5%-7.99% range.

DSCR Loans take approximately 14-21 days to close. This timeline is broken down into 2-7 days for the appraisal, 3 days for processing and underwriting, 3 days for closing. The process can be expedited to below 14 days if needed. See our detailed DSCR Loan Process below.

Typically the pricing of DSCR loans are consistent across states. In some cases, DSCR Loans in States with long tenant eviction processes will be marginally higher. For example, a DSCR loan in Florida or a DSCR Loan in Texas might have a slightly lower rate than a DSCR Loan in New York. At a maximum, the difference in rate is usually not more than 0.2%.