A Debt Service Coverage Ratio (DSCR) loan is a type of non-QM mortgage specifically designed for real estate investors. Unlike traditional loans that focus on your personal income, DSCR loans use the property's rental income to qualify you. The DSCR is calculated by dividing the property's net operating income (NOI) by its annual debt service. A higher DSCR indicates a stronger ability to cover the mortgage payments, making you a more attractive borrower.

DSCR loans are ideal for:

• Real Estate Investors: Individuals who own or are looking to purchase rental properties, including single-family homes, multi-family units, and commercial properties.
• Self-Employed Investors: Those with fluctuating income or complex tax situations, as DSCR loans don't rely on personal income verification.
• Portfolio Builders: Investors seeking to expand their real estate holdings.
• New and Experienced Investors: Whether you're a seasoned investor or just starting out, DSCR loans can be a valuable financing tool.

DSCR loans offer numerous benefits compared to traditional mortgages:

• No Income Verification: No need for pay stubs, tax returns, or W-2s.
• Lower Credit Score Requirements: DSCR loans may have more lenient credit score requirements than traditional mortgages.
• Higher Loan-to-Value (LTV) Ratios: You may be able to borrow a higher percentage of the property's value.
• Interest-Only Options: Reduce your initial payments with interest-only terms.
• Flexible Underwriting: Focuses on the property's potential, not just your personal finances.

DSCR is calculated using the following formula:

• DSCR = Net Operating Income (NOI) / Annual Debt Service
• NOI is the property's gross rental income minus operating expenses.
• Annual Debt Service You may be able to borrow a higher percentage of the property's value.
• Interest-Only Options: is the total annual mortgage payments, including principal, interest, taxes, and insurance.

Most lenders require a minimum DSCR of 1.0, meaning the property's net operating income must at least equal its annual debt service. However, some lenders may offer programs with lower DSCR requirements, sometimes as low as 0.75.

DSCR loans are available for a variety of property types:

• Single-family homes
• Multi-family properties (2-4 units, 5-10 units)
• Retirement accounts (401k, IRA, etc.)
• Condos and townhomes
• Mixed-use properties
• Certain commercial properties

Interest rates for DSCR loans are typically higher than those for conventional mortgages due to the higher risk associated with these types of loans. However, Ameritrust Mortgage offers competitive rates and a variety of terms to meet your needs.

Contact Ameritrust Mortgage to speak with a loan officer who specializes in DSCR loans. They will guide you through the application process, help you gather the necessary documentation, and answer any questions you may have.