Catering to the investor community focused on generating income through rental properties, Carben Capital has over 30 years of experience in the residential lending space. Our consultative process asks the right questions to deliver the proper financing to match your goals. Whether you are a first-time investor getting started or an experienced investor restructuring your portfolio for leverage and growth, we can help you get that property closed!
Simplified Lending!
What is DSCR?
Debt Service Coverage Ratio (DSCR) is a simple way to measure if the amount the property may earn in income can pay for the debt on that property.
To calculate your DSCR, divide the property's revenue (income) by its associated expenses (mortgage + taxes + insurance).
A Debt-Service Coverage Ratio (DSCR) of 1.00x indicates a property that is essentially "breaking even," where the revenue matches the expenses. If the DSCR ratio surpasses 1.00x, it signifies that the property is "cash flowing," indicating a surplus of revenue after covering expenses. Conversely, a DSCR ratio falling below 1.00x indicates that the property is operating at a monthly loss.
Example:
Total monthly income - $1800.00 (rental income)
Total monthly expense - $1750.00 (mtg payment + taxes + insurance)
DSCR - 1.028 (cash flows positively!!)
HOW DO DSCR LOANS WORK?
The DSCR loans focus the qualifying requirements more on the property’s income generation rather than the income of the borrower. Credit scores, assets to be used as reserves and past mortgage history all play a factor, but the main criteria for qualification is the ability of each property to cash flow positively.
Each lender operates within their own general guidelines on LTV’s and DSCR ratios, but this unique approach allows for a streamlined loan flow with fewer levels of documentation than the traditional hurdles associated with income proof.
WHY ARE DSCR LOANS POPULAR WITH REAL ESTATE INVESTORS?
Less documentation and paperwork required.
DSCR offers freedom from the traditional demands on income verification, employment history and general hassles of traditional agency lending products. Skinny files generally consist of a short form application, credit report, appraisal with rent schedule (or existing leases) and basic title work. Verifying every debt and multiple years of residency and employment are not needed.
Ideal for growing portfolios quickly!
For the investor looking to rapidly expand the number of units, DSCR provide strategic advantages that other programs cannot. Changing the focus of qualifying on cash flow allows for flexibility, efficiency and the ability to add multiple new properties in a short window of time.
Top Investor Benefits.
30 Year Term with 30 Year Amortization
No Debt to Income Calculations
Approval based on DSCR Ratio – (sometimes as low at .75)
Vesting Options - Close as an Individual, LLC, Partnership, or a Corporation
Rapid Growth – add properties as quickly as you find them
Use for Purchase, Rate/Term Refinance, and Cash-Out transactions
Single Family, 2-4 Units allowed
Prepay Optionality – various options to choose from to best meet your needs
Loan Amounts up to $2,000,000