DSCR  Loan Calculator

DSCR is a financial metric that measures the cash flow available to meet debt obligations. It is calculated by dividing the property's net operating income (NOI) by the total debt service (annual loan payments).

Our DSCR Loan Calculator uses this formula to calculate your ratio:

DSCR = NOI / Total Debt Service

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• Net Operating Income (NOI) is the income generated from a company's normal business operations, typically calculated as revenue minus operating expenses.

• Total Debt Service (TDS) refers to the total amount of principal and interest payments due on all outstanding debts over a specified period. It may include payments for loans, leases, and other forms of debt.

• Loans up to $2.5 million for purchases or refinances

• Cash-Out Loan amounts up to $1.5 million

• Qualification based on property cash flow

• No personal income or employment information required

• Rent must cover at least 75% of the monthly mortgage payment

• Clients must have 6 months of mortgage payments in reserves. Reserves can be held by the borrowers bank account, CD, retirement account, or stock account.​

• Minimum FICO score of 680

• Maximum Loan-to-Value (LTV) is 80% for purchase or refinance

• Maximum Cash-Out Refinance is 70%

• Properties can be single family and multifamily (up to four units)​

DSCR loans offer numerous benefits that empower real estate investors to make smarter, more profitable decisions. From accessing larger loan amounts to enjoying lower personal liability, these loans are tailored to meet the unique needs of income-generating property investments. The flexible terms, favorable interest rates, and long-term investment stability make our DSCR loans at Northwest Alternative Mortgage an attractive option for both seasoned and aspiring real estate investors looking to grow and diversify their portfolios. When utilized wisely, DSCR loans can pave the way for successful and rewarding ventures in the dynamic world of real estate. Call us today at 503-343-7999 to find out if you qualify for one of DSCR Loan programs!

Debt Service Coverage Ratio (DSCR) loans are a type of financing often used in commercial real estate ventures. Unlike conventional loans that primarily focus on the creditworthiness of the borrower, DSCR loans place more emphasis on the property's income-generating potential. The DSCR calculates the property's net operating income (NOI) relative to its debt obligations. A higher DSCR ratio indicates a more financially stable and secure investment, making DSCR loans an attractive option for real estate investors.

To learn more about hard money loans we offer at NW Alternative Mortgage give our team a call today at 503-343-7999.

Typically, lenders prefer a DSCR above 1.2 to 1.4, meaning the property's net operating income should be 1.2 to 1.4 times the annual loan payment.

One of the most significant benefits of DSCR loans is the potential to access larger loan amounts compared to traditional lending options. Since the loan approval is based on the property's income potential, rather than the borrower's personal financials, investors can secure more substantial financing. This access to larger capital empowers investors to take on more extensive projects and capitalize on lucrative opportunities.

• Lower Personal Liability: DSCR loans primarily rely on the property's ability to generate income to repay the debt. As a result, the borrower's personal liability is often reduced. This feature provides a sense of security to investors, as their personal assets are less at risk in case the investment faces unforeseen challenges or economic downturns. It allows investors to compartmentalize risk and separate their personal finances from their real estate investments.

• Favorable Interest Rates: Due to the lower risk associated with DSCR loans, lenders often offer more favorable interest rates compared to traditional loans. The property's income-generating potential and the stability of the investment reduce the lender's risk, enabling them to provide better terms to borrowers. Lower interest rates result in reduced borrowing costs, positively impacting the overall profitability of the investment.

• Flexible Repayment Terms: DSCR loans typically come with more flexible repayment terms. Lenders may offer options such as interest-only payments for a specified period, allowing investors to allocate more funds to other ventures or property improvements. Additionally, the terms can be tailored to match the cash flow of the property, providing further financial flexibility to borrowers.

• Leveraged Investments: DSCR loans open doors for leveraged investments, a strategy where an investor uses borrowed funds to increase the potential return on investment. By securing financing with a relatively low down payment, investors can control a more substantial property value compared to what they could purchase outright. If the investment performs well, the return on the initial equity investment can be significantly amplified.

• Enhanced Portfolio Diversification: Investors seeking to diversify their real estate portfolio can benefit from DSCR loans. These loans offer the opportunity to invest in different types of income-producing properties without being restricted by personal financial limitations. Diversification spreads risk across various assets, reducing the impact of a downturn in a single market on the overall portfolio.

• DSCR Loans For Commercial Real Estate: DSCR loans are especially well-suited for commercial real estate investments, where properties generate income through leasing and renting. This includes office buildings, shopping centers, industrial complexes, apartment buildings, and more. The focus on the property's income potential aligns perfectly with the objectives of commercial real estate investors.

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• Long-Term Investment Stability: The reliance on the property's cash flow and income potential for loan approval ensures that DSCR loans are geared towards long-term investment stability. By emphasizing the sustainability of the investment, borrowers and lenders align their interests, promoting responsible and sustainable real estate practices.