DSCR loan
An investment property loan qualified on the rental income the property produces rather than the borrower's personal income. Lenders look at whether rent covers the payment by a set ratio.
Also called: debt service coverage loan, investor loan, rental property loan
Related terms
A property's net operating income divided by its annual loan payments. A ratio above 1.0 means income covers the debt; lenders usually set a minimum, often around 1.2 to 1.25 for commercial loans.
A mortgage that does not meet the federal qualified mortgage rules, often used by self-employed borrowers, investors or people with recent credit events. It allows other ways to document income but usually costs more.
Real estate bought to rent to tenants for income rather than to live in. Lenders, insurers and tax rules treat it differently from a primary residence.
The money left each month after collecting rent and paying all expenses, including the mortgage. Positive cash flow means the property pays for itself with some left over.
A short-term loan from a private lender based mainly on the property's value rather than the borrower's income. It closes fast but carries high rates and fees, and is common with flips and other investment deals.