DSCR Loans Georgia
Discover the Benefits of DSCR Loans in Georgia for Property Investors
If you’re a property investor in Georgia and facing challenges with qualifying for conventional or private hard money loans, DSCR loans offer an attractive alternative. DSCR loans in Georgia have more flexible requirements and are a popular option for investors seeking property financing. Let’s delve into the details of Georgia DSCR loans and find out if they are the right solution for your investment needs.
Understanding Georgia DSCR Loans:
Georgia DSCR loans serve as a distinct financing option for home purchases, setting them apart from other traditional home loans. Instead of scrutinizing your assets and income, these loans rely on your Debt Service Coverage Ratio (DSCR) to determine your eligibility. The DSCR is a ratio that compares the annual rental income of a property with the annual cost of making loan payments on that property.
DSCR loans fall under the category of non-QM loans, which means you don’t have to go through the typical mortgage qualification process. Traditional mortgages often require extensive documentation, including proof of income and employment history verification. However, DSCR loans streamline the process for property investors, allowing them to invest in multiple rental properties, provided the rental income sufficiently covers the property’s annual debt obligations. It’s essential to note that DSCR loans are specifically designed for rental properties and not owner-occupied properties.
To qualify for DSCR loans in Georgia, you’ll need to have an acceptable DSCR ratio. This ratio is calculated by dividing your property’s annual rental income by its annual debt obligations. A DSCR of 1 indicates that your rental income matches your debt obligations.
Here’s a step-by-step breakdown of DSCR calculation:
1. Determine your annual rental income using lease agreements and an appraiser’s assessment on Fannie Mae Form 1007. The lower value between the two is taken as your rental rate. Alternatively, you can provide a 12-month history of rental income.
2. Calculate your annual debt, including principal, interest, taxes, insurance, and HOA payments made throughout the year.
3. Divide your annual rental income by your annual debt to get your DSCR. A DSCR above 1 implies that your rental income exceeds your debt obligations.
In cases where the DSCR is too low to secure a loan, other non-QM loans like bank statement loans may be viable options.
Advantages of Georgia DSCR Loans:
Georgia DSCR loans offer several advantages over traditional loans for property investors. Firstly, you won’t need to provide proof of income or employment history verification, simplifying the application process and resulting in shorter closing times.
At Funding, we strive to offer competitive interest rates on DSCR loans, ensuring that you don’t compromise on reasonable rates while investing in rental properties.
Additionally, Funding provides DSCR loan amounts up to $5,000,000 and allows you the freedom to invest in multiple rental properties without limitations.
Qualifying for a Georgia DSCR Loan:
To qualify for DSCR loans in Georgia, you must be an investor focusing on rental properties. These loans are not intended for owner-occupied homes. Therefore, homebuyers seeking such loans will need to explore other non-QM loan options, such as interest-only loans or recent credit event loans. Meeting the minimum DSCR requirement, a satisfactory credit score, and the ability to make a down payment are also necessary for loan approval.