Louisiana DSCR Mortgage Qualifier

Louisiana DSCR Loans

Louisiana is a prime real estate investing hotspot with its desirable attractions, expansive market, and culture. If you’re looking to invest in a property but lack the personal income to qualify for traditional loans, consider a Debt Service Coverage Ratio loan in Louisiana. DSCR stands for Debt Service Coverage Ratio and helps real estate investors get financing when they don’t meet standard lending criteria and want to avoid providing their tax, financial, and employment paperwork.

How Does The DSCR Mortgage Loan Work In Louisiana?

DSCR (Debt Service Coverage Ratio) is a common metric used by lenders to determine the creditworthiness of borrowers when assessing whether to approve a mortgage loan. It is calculated simply by dividing Annual Net Operating Income (NOI) by Annual debt Payments. The DSCR ratio will also determine what mortgage interest rate you qualify for and can even affect the maximum loan amount.

Pay attention, that lenders may factor property taxes and insurance into their DSCR calculation. However, these obligations should not be included to calculate total Net Operating Income (NOI) but accounted for only once as either operating expenses or debt obligations. This approach ensures accuracy and reliability when obtaining DSCR mortgages.

What is a good DSCR mortgage in Louisiana? In general, lenders prefer a DSCR above 1.0, meaning the borrower has adequate income to pay its current debt obligations. A DSCR lower than 1 could indicate that the company has difficulty meeting its existing obligations and is unable to take on additional debt without incurring long-term financial risk.

The Benefits Of A DSCR Mortgage Loan

No personal income reports
Unlike other loans where personal income is taken into account, DSCR lenders are based on the stability of cash flows. This makes such programs a great option for business owners and real estate investors who have substantial debt obligations but potentially limited current income.

Flexible terms
DSCR loan provides greater flexibility and can make it easier to secure financing even if investors wouldn’t qualify by traditional metrics. It’s no wonder that LBC Mortgage experts often recommend considering a DSCR mortgage loan when researching potential lending options.

Fast closing
Louisiana DSCR loan requires a lower level of documentation, allowing applicants to quickly and easily complete their application. You don’t need to explain any gaps in your job history, so this program can be beneficial if you’ve recently switched jobs or are self-employed.

Multiple properties at a time
DSCR loans are an excellent option for those who want to purchase more than one property at once. This is a big advantage, since it reduces the amount of paperwork, makes the process much simpler, and allows you flexibility if you later decide to sell or refinance any of your properties.

How To Apply For A DSCR Mortgage Loan

You can apply for a DSCR loan in Louisiana by contacting LBC Mortgage, and our loan officers will guide you through the process and answer any questions. The application process is fast and simple:

Book a free consultation
The process of applying for a DSCR mortgage loan can be complicated, but when you contact LBC Mortgage, we make it simple. Our knowledgeable loan officers have the expertise to walk you through every step. By answering any questions and providing personalized input, our team will assist you in getting your mortgage loan is as stress-free as possible. Take advantage of our services today and start enjoying the security of your dream property without added hassle or worry. Book now!

Property details
Provide accurate details about the property that you want to purchase or refinance. You’ll be asked to enter information such as the amount of rent income generated by the rental unit and the potential tenants’ credit backgrounds. It’s also important to give an accurate estimate of monthly operating expenses; these can include things such as utility costs, insurance fees, and deferred maintenance expenses. Keep in mind that these forms do not request personal income history, but only data related to your business or rental property.

Loan approval
The process of closing is fast compared to traditional mortgage programs. Once you accept the loan offer, you will receive a loan commitment letter from the lender outlining the agreement that serves as evidence of approval.

Louisiana DSCR Loan Requirements

  • Credit score of 640 or higher
  • At least 6 months of reserves
  • 20% down payment
  • A minimum DSCR of 1.25 is required.
  • Short-term Airbnb rentals are allowed
  • Unlimited cash-out opportunities
  • Interest only loan is possible
  • First-time investors as well as experienced ones are allowed
  • Not for first-time home buyers
  • Loan amounts up to $5 million

Answers To Most Common Questions

1. What is DSCR?
Debt Service Coverage Ratio (DSCR) is a financial analysis tool that measures a company’s ability to cover debt expenses with income. It is calculated by dividing the company’s annual net operating income by its annual debt service payments. DSCR is considered crucial in determining whether a company can obtain financing, and also provides insight into the financial health of a business.

2. What are the negatives of using a DSCR mortgage loan?
DSCR mortgage loans can be a useful financing option for income-earning property owners, but they also come with some drawbacks. For one thing, the DSCR mortgage loan has comparatively higher interest rates, meaning monthly payments will be costlier than other loan options. Besides, a DSCR mortgage loan comes with a 20-25% down payment. You should also consider additional fees such as lender fees and servicing fees. These can range from 0.5% to 1% of the entire loan and add extra cost to the purchase or refinance process.

3. How do I calculate DSCR?
Calculating DSCR requires understanding both the debt and revenues of an organization. To obtain this ratio, divide all cash flow from operating activities by total debt obligations that must be paid each year. The higher the ratio, the more financially sound an organization appears to its creditors.

Apply For A DSCR Mortgage Loan In Louisiana

Interested in a DSCR mortgage in Louisiana? Contact LBC Mortgage today! Our experienced loan specialists have the expertise, knowledge and understanding of the criteria required to best determine if you are eligible for a loan.

Have questions about the loan process? Ask us! As your trusted mortgage company, we want to ensure you feel empowered and informed throughout this journey, helping you make the most of your finances and achieving success.

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