Kelvin Craver NMLS 2009272 | DRE 02087655

The loan that looks at the rent, not your paycheck.

It's called DSCR. It's for anyone buying a rental. It mostly asks: does the rent cover the whole monthly cost?

Got a place in mind? Send me the basics.

Why rental #2 gets hard

A regular loan looks at you. What you owe versus what you make. That's your debt-to-income.

Rentals can pile onto the owe side

Each financed one adds a mortgage, and the bank only counts part of the rent against it. If that part doesn't cover the payment, the gap counts as debt. And the bank wants more in savings as you add more. So each one can make the next one harder.

Regular loans have a cap

They limit how many financed properties you can have. For Fannie Mae, it's 10.

The main test: rent versus cost

So investors use a loan that mainly looks at the house. DSCR stands for debt service coverage ratio. Fancy name for rent versus cost.

Rent ÷ the whole monthly cost

The whole monthly cost is the payment, plus taxes, insurance, and HOA if there is one.

Rent about even with the whole monthly cost

= 1.0

Rent's higher? You're over 1. At 1.0 or above, the rent covers the whole monthly cost. Repairs and empty months are still on you. Different programs accept different ratios, and there are options even when it's slightly under.

What it doesn't use to qualify: pay stubs, tax returns, your debt-to-income.

Who it's for

Anyone buying a rental can apply. Most of the people using it are investors who:

Don't want rentals stacking on their DTI

It doesn't use your personal income or debt-to-income to qualify.

Are maxed out on financed properties

It's not a Fannie Mae or Freddie Mac loan, so their 10-property cap doesn't apply. DSCR lenders set their own limits, usually higher.

Self-employed folks use it too. You don't have to be.

Rentals only

Not the home you live in.

Easier if you already own a home

Most lenders want you to already own a home, or to have owned one in the last few years. Never owned one? Doable, just harder.

They still check you. Just not your paycheck.

Credit

A credit profile in a workable band.

Savings

Some cash reserves.

Down payment

More than you'd put down on your own home.

The property

Rent that covers, or nearly covers, the whole monthly cost. And a property type that fits the program: single-family, small multi, often short-term rentals too.

Try this tonight

Look up what places nearby rent forSame area, similar size.
Add up the whole monthly costPayment, taxes, insurance, and HOA if there is one.
Compare the twoRent comes up short? That gap comes out of your pocket every month, and it can mean a bigger down payment or a different program.

This is a gut check, not an approval. The lender uses the appraiser's rent number and still checks your credit, savings and down payment. I won't quote you a rate in a DM. That depends on your specifics, and I'd be guessing.

Got a property you're looking at?

Send me the basics, or the one you got turned down on. I'll tell you honestly if the deal pencils before you waste time.

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