DEBT SERVICE COVERAGE RATIO
How to Calculate the DCSR?
DSCR for a given property is calculated by dividing the expected rental payment by the monthly mortgage debt.
Example: Rent = $2500 and mortgage payment = $2000 the Ratio is $2500/$2000 = 1.25% .This is a positive scenario. Lenders have different cash flow ratio requirements. If the rent is $2500 and the mortgage is $3500 the ratio is $2500/$3000 = .71. This is negative cash flow. Don’t give up. thou, some lenders will allow a negative cash flow up to a certain percentage.
A typical acceptable debt service coverage ratio is 75%. Meaning that the monthly income for the property covers 75% of the monthly mortgage obligation.
WHO SHOULD USE A DSCR LOAN?
A FEW THINGS TO KNOW
The Prequalification Process in Arizona:
1st American Residential Lending, LLC
17435 East Cindercone Way, Rio Verde, Arizona 85263, United States
602-922-3501 AZ MB 1044813 NMLS #2447005
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