Frequently Asked Questions

The good news is that there’s no set answer to this question either – each lender has its own requirements. However, most lenders will want to see that you have enough income to cover your current debts, as well as the payments on your DSCR loan.
This depends on the lender, but typically you’ll need to put down at least 30% of the purchase price. You may also be required to get private mortgage insurance (PMI) if you put down less than 30%.
DSCR = Operating Income / Total Interest Payments To calculate the DSCR ratio, divide Operating Income by Interest Payments. The result should be greater than 1.0 for a company to be considered healthy. A high DSCR ratio means that the company is generating more Operating Income than it needs to pay its interest payments. This gives the company room to grow and expand operations. A low DSCR ratio means that the company is not generating enough Operating Income to cover its interest payments. This could lead to financial troubles down the road. It is important to monitor the DSCR ratio over time and compare it to other ratios, such as the Debt-to-Asset Ratio and the Interest Coverage Ratio.
FHA mortgage insurance is required for all FHA loans. The insurance protects lenders from borrowers who default on their loans. However, it also requires borrowers to pay a premium, which can add to the cost of their loan. If you want to get rid of your FHA mortgage insurance, you’ll need to refinance to a conventional loan. You’ll need a credit score of 620 and 20% equity in your home to qualify. While this may seem like a high bar to clear, it’s actually easier than it sounds. There are several ways to improve your credit score, and there are many programs to help you come up with the down payment.
If you’re looking to improve your DSCR ratio, there are a few things you can do:
  • Try to increase your revenue and decrease your expenses. That may sound obvious, but your DSCR ratio is a measure of your ability to service your debt. Increasing your revenue without increasing your expenses will help.
  • Another option is to renegotiate the terms of your debt. If you can get a lower interest rate or extend the term of your loan, you’ll reduce your debt service requirements and improve your DSCR ratio.
  • Finally, try to increase the value of the collateral underlying your loan. If the value of your property increases, you’ll have more equity to cover any potential losses and your DSCR ratio will improve.
Whatever strategy you choose, improving your DSCR ratio is all about increasing your ability to service your debt.
To qualify for a DSCR mortgage loan, borrowers must have a strong financial history and should demonstrate an ability to repay the loan. Additionally, the property being purchased must be income-generating, which provides the lender with some security in case a borrower is unable to make payments.
To qualify for a DSCR loan, you will need to make a down payment of at least 20-25%. Additionally, your credit score must be 640 or higher to meet your lender’s DSCR requirement. Some lenders may also require that your property earn 120-150% of the monthly mortgage payment. If you are able to meet these qualifications, a DSCR loan can be an excellent way to finance your home purchase in Colorado.
To qualify for an FHA loan, borrowers must have a steady employment history, a good credit score, and a down payment of at least 3.5%. Additionally, borrowers must be able to show that they can afford the monthly mortgage payments. If you think you might qualify for an FHA loan, the best first step is to talk to a lender who can help you review your options.
If you’re considering refinancing your jumbo mortgage, it’s important to understand the process and what lenders will be looking for. One of the most important factors in determining whether you qualify for refinancing is your credit score. Lenders will also look at your employment history, income, and assets to determine whether you have the financial stability to make monthly payments. In addition, you’ll need to have at least 20% equity to qualify for a jumbo mortgage refinance. If you’re ready to take on the challenge of refinancing a jumbo mortgage, make sure to work with LBC Mortgage, and we will guide you on the process.
Debt Service Coverage Ratio (DSCR), or Debt Coverage Ratio, or DCR, is a metric that compares a property’s revenue to its debt obligations. Properties with a DSCR of more than 1.0, are considered profitable, whereas those with a DSCR below this point, are considered to be losing money.
Depending on the program and term of your mortgage, each month your payment will pay down the principal and interests. Typically, a bigger portion of your payment will go towards you interest, especially in early years of your term. Additionally, depending on details of your loan, portion of you payment may be applied to mortgage insurance, homeowner’s insurance, property tax and flood insurance if applicable.
That depends on your individual circumstances. If you’re planning on selling your home within a few years, for example, you may save money in the long run by taking out a no closing cost mortgage and paying the higher interest rate. On the other hand, if you plan on staying in your home for many years, you may be better off with a traditional mortgage and paying the upfront closing costs.