If you’re looking to invest in commercial real estate, you may have come across the term DSCR. DSCR stands for debt service coverage ratio, which is a key metric used by lenders to determine the amount of financing they will provide for commercial properties. Here are the top 15 questions about DSCR loans, along with their answers:
- What is DSCR, and how is it calculated? DSCR stands for Debt Service Coverage Ratio. It is calculated by dividing the property’s net operating income (NOI) by its total debt service. The ratio is used to determine whether a property generates enough income to cover its debt payments.
- What is the minimum DSCR required to qualify for a loan? The minimum DSCR required to qualify for a loan varies depending on the lender and the type of property. In general, lenders look for a DSCR of at least 1.2, meaning the property’s net operating income is 1.2 times its debt service.
- What types of properties are eligible for DSCR loans? DSCR loans are typically used for income-generating commercial properties, such as apartment buildings, office buildings, and retail spaces.
- What documentation is required for a DSCR loan application? Documentation required for a DSCR loan application includes the property’s financial statements, tax returns, rent roll, and a property appraisal. The borrower may also need to provide personal financial statements and tax returns.
- What are the benefits of a DSCR loan? DSCR loans typically offer lower interest rates and longer loan terms compared to traditional commercial loans. They are also easier to qualify for because the lender is primarily concerned with the property’s ability to generate income.
cwJVjKdo
Your comment is awaiting moderation.