Rental property
DSCR loans: understand your rental’s numbers.
Compare rent with the property payment, then look beyond the ratio before your financing conversation.
Start with the rent and payment
The website’s DSCR calculator divides monthly rent by monthly principal, interest, property taxes, insurance and association dues (PITIA). For example, $2,400 in rent divided by a $2,000 payment produces a modeled DSCR of 1.20.
That is a scenario calculation, not an eligibility result. The lender’s treatment of rent, expenses and required payments may differ from this model.
A ratio is only part of the picture
Discuss the property, requested loan, credit, available reserves and investment purpose with Luke. A published ratio does not establish an available loan amount, rate or approval.
Rent left after PITIA is not net profit. Allow for vacancy, repairs, management and other operating expenses when you evaluate the property for yourself.
Prepare a useful rental scenario
Use your purchase target or estimated refinance value and the requested total loan balance. Distinguish current rent from the rent you hope to achieve; explain a vacancy or planned renovation rather than presenting projected income as an existing lease.
- Property location and purchase or refinance goal
- Current lease or your clearly labeled rent assumption
- Tax, insurance and association-cost estimates
- Available funds and your plan for the property
Put this into your own scenario.
INVEST
A business-purpose property
KMN LLC
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