Arizona DSCR Loans
How do you get a DSCR Loan in Arizona?
Exploring DSCR Loans in Arizona for Real Estate Investors
If you’re a real estate investor looking for financing options in Arizona but can’t rely on your tax returns or pay stubs, DSCR loans might be the solution for you. DSCR loans allow investors to qualify based on the cash flow of their property rather than their personal income, providing an alternative to traditional mortgage loans and reducing some of the complexities associated with real estate investments.
Understanding DSCR Loans:
DSCR loans, short for Debt Service Coverage Ratio loans, belong to the category of non-QM (non-qualifying mortgage) loans. Unlike traditional mortgages that scrutinize various aspects such as assets, employment status, debt-to-income ratio, and credit history, DSCR loans assess the annual rental income of the property in relation to its debt obligations. This ratio, known as DSCR, determines the eligibility for the loan.
To determine your eligibility for a DSCR loan, lenders will calculate your DSCR ratio. This is done by dividing your property’s annual gross rental income by its annual debt obligations, which include principal, interest, taxes, insurance, and any HOA payments.
A Good DSCR Ratio:
Ideally, a DSCR ratio above 1.0 indicates that your income covers your debt obligations and generates positive cash flow. However, some lenders, like accept DSCR ratios of 0.75 or higher for DSCR loans in Arizona. While a higher DSCR ratio may result in a lower interest rate, it is not necessary to have an exceptionally high ratio to qualify.
DSCR Loan Requirements:
In addition to the DSCR ratio, DSCR lenders may have other conditions for loan approval. For example, at DSCR ratio below 1.0 would require 12 months of reserves to qualify. Reserves refer to readily available assets, like cash, that can be used to pay the mortgage in emergencies. Minimum credit scores are also usually required.
Best Suited for Real Estate Investors:
DSCR loans in Arizona are best suited for real estate investors seeking to expand their investment portfolios. Since these loans are based on rental income rather than personal income, they provide a viable option for investors looking to finance multiple properties.
Consider Other Options:
For individuals with low DSCR ratios, there are alternative loan options to explore, such as asset-based loans, bank statement loans, or recent credit event loans.
Highlights of Arizona DSCR Loans:
– Typically require a DSCR ratio of at least 1.0 or 1.25 (depending on the lender).
– Suitable for real estate investors aiming to invest in multiple properties.
– Valid only for non-owner-occupied investment properties.
– APR may be slightly higher compared to traditional mortgages.
Where DSCR Loans are Available:
Griffin Funding offers DSCR loans in various locations in Arizona, including Phoenix, Tucson, Mesa, Chandler, Glendale, Scottsdale, Gilbert, Peoria, Tempe, and Surprise.
Apply for a DSCR Loan:
If you’re interested in obtaining a DSCR loan in
In conclusion, DSCR loans can be an excellent choice for real estate investors in Arizona, offering a streamlined process and a focus on rental income to expand their investment ventures. Speak with a knowledgeable specialist