DSCR Loans for Foreign Investors
Debt Service Coverage Ratio (DSCR) loans are designed to help investors purchase or refinance long-term rental properties. These loans are centered around cash flow and equity growth, and they don’t require personal income verification for qualification, making them especially popular among nonresident investors.
Key Benefits of DSCR Loans
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Qualification based on property income
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No personal income verification required
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Down payments from 20-35%
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Flexible for business entity ownership
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Popular choice for nonresidents and business owners
Loan Parameters
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Loan amounts: $100K – $5M
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Interest rates: 6-9% (fixed)
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Loan-to-value (LTV): 50-80%
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Term: 30-year fixed
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Minimum DSCR: 0.75
Qualifying Properties
Single-family homes
Multi-family properties
Condominiums
Townhouses
Manufactured homes
Qualification Criteria
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Ideal DSCR: 1.25+
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Minimum DSCR: 0.75
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Documented rental income
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12 months mortgage payment reserves
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No declining markets
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Short-term and long-term rental history accepted
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Required funds: Down payment + 12 months reserves + cash to close
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Bank statements (1 month)
Documents Needed
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Personal identification
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Bank statements
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Rental income statements
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Property lease agreement
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Property appraisal
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Memorandum of investment strategy
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Real Estate Owned (REO) schedule
Advantages vs Disadvantages
| Advantages | Disadvantages |
|---|---|
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Streamlined qualification
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Stricter property condition requirements
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No U.S. credit history needed
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Loans limited to investment properties
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Investment-focused loan
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Complex appraisal standards
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Tax benefits based on location
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Primary residence ownership may be required
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Financing for multiple properties
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|
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First-time investors welcome
|
|
Loan Options
Purchase
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New property acquisition
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Down payment: 20-50%
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Immediate cash flow potential
Loan Parameters
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Replace existing financing
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Leverage current property income
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Cash-out options available
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Reduced cash-to-close requirements
DSCR Ratio Calculation
The DSCR is calculated as
DSCR = Rent / (Principal + Interest + Taxes + Insurance + Association Fees)
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Minimum acceptable ratio: 0.75 DSCR
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Ideal ratio: 1.25+ DSCR
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Increased proof of funds: 1.0 DSCR
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Reduced leverage: 1.15 DSCR and below
Short-Term vs. Long-Term Rentals:
| Long-Term Rentals | Short-Term Rentals (e.g., Airbnb, VRBO) |
|---|---|
|
Predictable income and cash flow
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Higher income potential
|
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Standard 6-12 month lease agreements
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More complex income verification
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Lower rental income volatility
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Seasonal/peak considerations
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Easier income verification
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Platform revenue documentation required
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Appraisal Importance
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Determines property value
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Impacts loan-to-value ratio
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Validates raental income projections
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Critical for loan approval
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Assesses property condition
| Service | Amount |
|---|---|
| Average Appraisal Cost | $550 |
| Rent Schedule Form 1007 | $125 |
| AirDNA Fee | $175 |
Loan Terms
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30-year fixed
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40-year fixed interest only period
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Flexible term options
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Interest-only payments
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ARMs available
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LTV stacking (finance your fees!)
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No points option
| Mortgage Origination Fees | Amount |
|---|---|
| Processing Fee | $550 |
| Lender Fee | 0-2% |
| Underwriting Fee | $795 – $3,000 |
| Origination Fee | 1-3% |
| Admin Fee | $0 – $995 |
Loan Process
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Schedule an online meeting with a mortgage broker
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Submit documents for pre-approval
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Upload insurance and title company info
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Receive loan estimate and complete credit card authorization via DocuSign
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Enter processing for title work, insurance binding, and underwriting
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Address underwriting requests
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Receive final term sheet within 24 hours after appraisal
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Funding completed within 24 hours of final agreement
Why Choose DSCR Loans?
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Simple qualification based on property income
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No need for personal income verification
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Flexible terms and conditions
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Designed for foreign investors looking for portfolio growth
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