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Investor Cash Flow Loans

An Investor Cash Flow loan is a type of loan that allows you to finance an asset purchase, such as an income property, using that property’s projected cash flow.

This type of loan is also considered non-conforming, which means it doesn’t fall under the same guidelines as those issued by Fannie Mae and Freddie Mac. A mortgage lender backing the loan allows you to get a flexible deal.

Qualifying

Also known as Debt Service Coverage Ratio, or DSCR loans, Investor Cash Flow loans  are typically used to fund the purchase of an income property. With a maximum loan-to-value of 75%, you can easily cover the first 25% of the purchase price. This type of loan can also be used to refinance. Unlike a traditional mortgage, the requirements for a DSCR loan are slightly different depending on the type of property and the amount of money involved. 

For instance, you will need to show your history of owning and managing rentals over one year and a credit score of 680 or higher. If you’re unable to find a tenant to rent a property, you’ll need to establish a savings of at least six months to cover the expenses that would arise if there’s no one in place.

Calculation 

Depending on the type of loan and the amount of money involved, the amount that you can borrow depends on the DSCR calculation. This calculation takes into account the monthly portion of the property’s net operating income, which is divided by the mortgage payment.

If the tenant pays $5,000 a month, the investor receives an NOI of $4,500. 

Other expenses such as property taxes and property taxes are also considered to come up with the total monthly income. The debt service ratio is then used to determine the maximum mortgage payment. For instance, if the total amount of money you can borrow is $4,500 and the DSCR is 1.4, the monthly payment is around $3,214. The mortgage payment covers all expenses and generates some revenue for the investor. This method also takes into account property taxes and other costs. 

Choose MBANC

Are you looking to add to your rental property portfolio or refinance? With a DSCR Investor Cash Flow loan, you can easily fund the cash flow of a property and achieve financial goals that are consistent with your current situation. To learn more about our services and products, contact MBANC today.