Frequently Asked Questions

A DSCR mortgage is a type of loan that is typically used by investors to finance the purchase of income-producing properties. The loan is structured so that the borrower’s monthly mortgage payments are equal to or greater than the property’s net operating income (NOI).
A DSCR (Debt Service Coverage Ratio) mortgage program is a type of loan that is specifically designed for real estate investors looking to purchase rental properties. It is based on the property’s rental income and expenses, rather than the borrower’s personal income and credit score.
A good DSCR varies depending on the industry, but generally speaking, a DSCR of 1.5 or higher is considered healthy. This means that for every $1 of debt, there is $1.50 of cash flow available to repay the loan.
A good DSCR ratio falls between 1.25 and 2.5. This range indicates that a property is generating enough income to cover its mortgage payments and other associated costs, while still providing a reasonable cushion in the event of an unexpected expense. A lower ratio may indicate that a property is at risk of defaulting on its mortgage, while a higher ratio may indicate that a property is not generating enough income to justify its purchase price. However, it is important to remember that the DSCR ratio is just one factor to consider when evaluating a property.
A jumbo loan is a mortgage that exceeds the conforming loan limits set by the Federal Housing Finance Agency. In most of the country, the maximum loan amount that can be purchased with a conforming loan is $647,200. However, in some areas of the country, including parts of California, the limit is as high as $970,800.
When refinancing your mortgage, there are a lot of different fees and costs to consider. Some of these, like the loan origination fee, are typically rolled into the loan itself. Others, like appraisal fees or title insurance, are paid upfront. And then there are closing costs, which can add several thousand dollars to the total cost of your refinance. A no closing cost refinance is a loan that helps cover these costs at signing, so you don’t have to come up with the cash upfront.
An appraisal is an evaluation of property obtained from an independent certified professional. It is needed to help the lender to determine market value of the property you are purchasing, since the property will be used as collateral against the mortgage.
An Asset Depletion Loan is a type of mortgage that allows borrowers to use their liquid assets, such as savings or investments, to qualify for a loan. Asset Depletion Loans can be used to purchase a primary residence, second home, or investment property.
An FHA loan is a mortgage that is insured by the Federal Housing Administration. Because of this insurance, lenders are able to offer lower down payment requirements and more flexible underwriting guidelines.
ITIN stands for Individual Taxpayer Identification Number. It’s a unique number that the IRS assigns to people who don’t have a Social Security number. ITIN loans are special loans available to people with an ITIN number.

Refinancing is the process of paying off an existing mortgage with a new loan that has different terms, and it can serve multiple strategic purposes depending on a borrower’s situation. Through LBC Mortgage, refinancing is approached as a financial restructuring decision rather than a one-size-fits-all transaction. Borrowers may refinance to secure a lower interest rate, which can reduce monthly payments and total interest paid over the life of the loan, particularly if market rates have improved or credit has strengthened since the original purchase.

Another common reason to refinance is to change the loan term or structure. For example, extending a loan back to a 30-year term can lower monthly obligations and improve cash flow, while shortening the term can help build equity faster and reduce long-term interest expense. Some borrowers refinance to switch from an adjustable-rate mortgage to a fixed-rate loan to gain payment stability, or to move from interest-only to fully amortizing payments as financial priorities change.

Refinancing can also be used to access home equity through a cash-out refinance. This allows homeowners or investors to convert a portion of their accumulated equity into cash, which may be used for home improvements, debt consolidation, business needs, or additional real estate investments. LBC Mortgage evaluates refinancing scenarios by reviewing current loan terms, property value, equity position, and long-term objectives to determine whether refinancing provides a meaningful financial benefit rather than short-term relief alone.

A good debt service coverage ratio is 1.25 in general. Anything higher is an ideal DSCR. Lenders want to see that you can pay off your debts while also earning enough money to cover any cash flow fluctuations.