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Unlocking Financial Flexibility with DSCR Loans
For savvy real estate investors in Maryland, DSCR mortgage loans offer a convenient and attractive option to finance their property purchases. DSCR, or debt service coverage ratio loan, stands out from traditional loans, as DSCR mortgages require lower down payments, have simpler and quicker approval processes, and provide a more generous repayment timeline for borrowers. Additionally, DSCR mortgage loans can be beneficial to real estate investors looking to make their money grow with minimal hassle.
What does DSCR mean in a mortgage?
Understanding the debt service coverage ratio (DSCR) is paramount when attempting to secure a loan, especially in Maryland, where DSCR requirements are solely determined by the lender. DSCR measures a company’s ability to repay its loans, take on new financing and make dividend payments, so it is an effective tool for creditors to assess risk levels. Companies should be aware of their DSCR consistently over time to remain in a good financial position and manage repayments.
How to calculate DSCR?
DSCR calculation is not complicated: simply divide net operating income (NOI) by total debt service (TDS). NOI is how much cash a property is generating after expenses, while TDS accounts for the periodic payments on any outstanding loans. An investor can get a good picture of the risk-versus-reward associated with their chosen property by understanding their DSCR results.
What does a good DSCR mean?
When considering a loan for an applicant, a DSCR ratio of 1.00 serves as a sign that the borrower can handle it, as there will be enough cash flow from their property to pay off the loan. The DSCR ratio above 1.00 is better for the borrower, as it means that extra resources become available.
With a DSCR of 1.25, there is sufficient extra room to cover payments and other potential liabilities. If it increases beyond 1.50, the borrower will have even more breathing room when repaying their loan. Thus, investors should analyze their DSCR prior to applying for a loan to have a greater chance of success going forward.
How to improve a company’s DSCR
Improving a company’s Debt Service Coverage Ratio is an important part of financial stewardship. There are many ways to accomplish this goal, each of which will require a customized approach tailored to the specific needs of the business:
- Reducing expenses
- Increasing operational efficiency and cost controls
- Paying down existing debt
- Entering into advantageous leases
- Investing in equipment that can generate additional revenue streams.
By taking proactive measures, companies can protect their long-term interests while also staying ahead of their financial obligations.
DSCR loan requirements
- Minimum loan amount is $150K
- Quick closing time
- 20% down payment
- No income reports or job history
- Up to $5 million of a loan amount
- Unlimited number of investment properties
- Unlimited cash-out opportunities
- DSCR should be as low as 1
- Airbnb short-term rentals are allowed
- Delayed financing options
- Interest-only payment is allowed
- 640+ credit score
- New and seasoned investors are allowed
DSCR loan in Maryland is the best choice for investors
The Maryland DSCR loan is an appealing choice for new and experienced investors, as well as self-employed who do not want to provide extensive employment information, such as tax returns, W2s, and paystubs. It is ideal for business owners looking to invest in properties but having complex incomes, which would lead to excessive documentation requirements.
To get approved for a DSCR loan in Maryland, a potential borrower needs to provide evidence of experience in real estate investments and a detailed cash flow analysis.
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Work with a DSCR mortgage company in Maryland
Real estate investing can be a lucrative endeavor. However, it is important to ensure you are making smart decisions with every purchase. To maximize return on investment, it is important to investigate different loan programs to secure the best rate possible. A DSCR mortgage in Maryland is an attractive option since it helps investors get the most out of their money by locking in a competitive fixed rate with flexible repayment terms.
Getting the best DSCR loan terms can be a challenge, especially when you have less-than-stellar credit ratings. But at LBC Mortgage, that isn’t an issue. With a full range of services and years of experience in the industry, Maryland borrowers have a maximum value on their loans.
With our helpful customer service and dedication to finding exceptional loan terms, investors get solutions for their mortgage needs. Contact us today to discover exactly how we can make securing the best DSCR loan terms easy and stress-free.