Debt Service Coverage Loans (DSCR)

DSCR stands for Debt Service Coverage Ratio and DSCR loans are a tool for investing in rental properties (including Airbnbs!). Here, there is no analysis of the borrower’s financial situation. Rather, the process revolves around an analysis of the subject investment property and whether the rental income (or potential rental income) will cover the monthly payment (or debt service of the subject investment property.

There are two types of DSCR loans

1. Traditional DSCR
   A borrower can qualify for a traditional DSCR loan if the monthly rental income of the property covers or is greater than the monthly mortgage payment, meaning the coverage ratio is 1:1. Check out our DSCR Qualifier here.
2. No Ratio
   A no ratio DSCR loan is one designed to accept a monthly payment that is slightly higher than the rental income. In this situation, the rate and terms of the loan may be less favorable than a traditional DSCR loan, but it is still a useful tool if it fits your investment criteria. Contact a DirectFi Mortgage Loan Officer to discover your options!

Alt-Doc Loans

Alternative Documentation Loans (Alt-Doc) help borrowers qualify through the use of non-traditional forms of verification of employment (i.e., bank statements, asset-based qualifications, one-year tax returns as opposed to the traditional two-year requirement etc.). These different verification methods can help lenders verify a borrower’s ability to afford their mortgage payments. Alt-Doc Loans are excellent options for self-employed borrowers who do not satisfy traditional requirements but qualify under more flexible methods. Contact a DirectFi Mortgage Loan Officer to discover your options!

ITIN Loans

ITIN loans are meant for those who do not have a social security number but have been issued an ITIN number from the IRS. These loans typically require a higher down payment than more traditional options. Contact a DirectFi Mortgage Loan Officer to discover your options!

VOE/P&L Loans

VOE/P&L loans are another flexible option (in addition to the Alt-Doc Loans above) for potential borrowers. In these situations, lenders will verify employment through a Verification of Employment Letter from the borrower’s current employer. If the borrower is self-employed, then a lender can accept an accountant-prepared profit and loss statement for the previous year and the current year to date. Contact a DirectFi Mortgage Loan Officer to discover your options!