DSCR Loans:
Financing
Made Simple.
Unlock the Power of Your Property’s Income with DSCR Loans
Simplify your real estate financing with loans based on your property’s cash flow, not your personal credit score.
What is a DSCR Loan?
A Debt Service Coverage Ratio (DSCR) loan is designed for real estate investors and property owners. It’s based on the property’s ability to generate enough income to cover its debt obligations, not your personal credit score.
If you’re looking to finance your real estate investments with a more flexible, income-based approach, SouthFork Funding is here to help.
Ready to explore your options?
Why Choose DSCR Loans with SouthFork Funding?
Flexible Loan Terms: DSCR loans provide flexible loan-to-value ratios and terms, making it easier for you to secure funding for residential and commercial properties.
No Personal Tax Returns Needed: One of the biggest advantages of DSCR loans is that they don’t require personal income documentation. This can significantly simplify the approval process.
Income-Based Approval: Our DSCR loans are based on the property’s cash flow, not your personal income or credit score, which means your financing options are not limited by traditional credit factors.
Competitive Interest Rates: We offer highly competitive interest rates on DSCR loans, ensuring you receive the best possible terms based on the market conditions.
How Do DSCR Loans Work?
DSCR loans are designed for real estate investors who want to leverage their property’s rental income to secure funding. Instead of relying on personal financial history, DSCR loans focus on the property’s Debt Service Coverage Ratio — the ability of the property to generate enough income to cover the loan’s debt payments.
Here's how it works:
DSCR = Property's Net Operating Income (NOI) / Debt Service (Loan Payments)
Net Operating Income (NOI): The annual income generated by the property after subtracting operating expenses (but before debt service).
Debt Service: The total amount of money you need to pay on your loan each year (including both principal and interest).
How to Calculate Your DSCR
How to Calculate DSCR
the Debt Service Coverage Ratio (DSCR) for your property.
Steps to Calculate DSCR
Step 1: Calculate Net Operating Income (NOI)
To calculate your property’s Net Operating Income (NOI), follow these two steps:
- Take the total rental income from your property.
- Subtract any operating expenses (maintenance, property management fees, insurance, taxes, etc.).
Example:
Rental income = $5,000/month = $60,000/year
Operating expenses = $20,000/year
NOI = $60,000 - $20,000 = $40,000
Step 2: Calculate Debt Service
This is the total amount of money you need to pay for the loan each year, which includes both principal and interest.
Example:
Annual loan payments = $30,000/year
Step 3: Calculate DSCR
Now, you can calculate the Debt Service Coverage Ratio (DSCR) using the formula:
DSCR = NOI / Debt Service
Example:
DSCR = $40,000 / $30,000 = 1.33
This means the property generates 1.33 times the income needed to cover the debt service.
YOUR DREAM, YOUR HOME