Rental Property Loans Atlanta

A DSCR loan qualifies the rental on its rent, not your paycheck. DSCR means debt service coverage ratio: the rent divided by the monthly payment, including taxes and insurance.

Many lenders want 1.0 to 1.25, per a BiggerPockets post. At 1.0 the rent just covers the payment. A higher ratio, meaning more rent left over, usually gets better terms.

Lenders on BiggerPockets have said some DSCR programs start at 15% down on a single-family home, while most want 20% to 30%. Terms vary by lender and change over time.

Not always. A lender on BiggerPockets said many lenders use market rent from the appraisal on a rent-ready house. A vacant house that still needs work usually needs a bridge loan first.

Sometimes. A BiggerPockets post says some lenders won’t count short-term rental income, and others will but lower your loan-to-value (LTV) or want an operating history.

Often, yes. A BiggerPockets post says many programs raise the minimum DSCR from 1.0 to 1.25 on loans under $150,000. Ask about minimum loan size up front.

Many have one. Investors on BiggerPockets mention prepayment penalties on most DSCR programs. If you may sell or refinance soon, ask for the penalty terms in writing.

Yes. A cash-out refinance with a DSCR loan can pull equity from a rental, based on the appraisal and the rent. A banker on BiggerPockets noted equity only helps in a refinance, not a purchase.

Yes. That’s the refinance step in the BRRRR method. A BiggerPockets post warns many lenders want 3 to 6 months of seasoning before using the new appraised value.

Usually, yes. DSCR loans are business loans, so many lenders let you close in an LLC. Expect to sign a personal guarantee, as BiggerPockets members point out.