Five Things You Shouldn't Assume About DSCR Mortgage Financing


If you're looking for real estate investment mortgage loan options, it's definitely worth considering DSCR mortgage financing. However, it's essential for you to be properly informed about these mortgage loans before assuming that they're the best financing option available in your situation.

The following are five things you shouldn't assume about DSCR mortgage financing.  

You can definitely be approved for DSCR mortgage financing.

Some real estate investors think that there are few or no requirements for getting approved for a DSCR mortgage. However, this is not the case.

You will have to meet certain credit history requirements in order to be approved. That's why it's important to become approved before you start planning to use a DSCR mortgage to purchase a property. 

You don't have to put any money down on a DSCR mortgage loan.

A DSCR mortgage relies more on the income-generation potential of a property to secure the loan than the income of the borrower. However, that doesn't mean that no down payment is required on a DSCR mortgage. In fact, borrowers typically need to put down a substantial down payment in order to be approved. 

You can use a DSCR mortgage loan on a property you want to live in.

In general, DSCR mortgage loan financing is set up for investment properties and not for properties that the buyer is planning to use for themselves even on a part-time basis. You shouldn't even expect to live in a property for only part of the year if you purchased it through a DSCR mortgage. 

DSCR mortgage loans are too expensive to be worth it.

It's true that the average DSCR mortgage loan may have a slightly higher interest rate than the average traditional mortgage loan. Yet this doesn't mean that the numerous benefits of taking out a DSCR mortgage loan won't outweigh the costs.

There are numerous advantages to DSCR mortgages including a relatively fast approval process and limited or no income requirements on the part of the borrower. These advantages may outweigh the added interest costs of a DSCR mortgage. 

You have to title a property you buy with a DSCR mortgage in the name of your company.

A DSCR mortgage can offer you the flexibility of being able to title your property in either your name or the name of your company. The purchased property can also be titled in the name of a trust depending on the unique needs and preferences of the real estate investor taking out the DSCR mortgage. 

Contact a lender for more info


31 January 2023

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