By Bill Lyons | Published on January 15, 2023
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    A debt service coverage ratio (DSCR) loan is a type of commercial loan that is typically used for investment properties. For lending purposes, the DSCR is a financial ratio that compares a property’s gross rental income to its debt service (i.e. mortgage payments). The higher the DSCR, the more income the property generates relative to its debt, and the more likely it is that the loan will be approved.

    Real estate investors in New York can benefit from a DSCR loan in a number of ways. For example, it can help them to purchase an investment property with a lower down payment, as lenders typically require a higher down payment for commercial loans. Additionally, DSCR loans may have lower interest rates than other types of commercial loans, which can help investors to save money on interest over the life of the loan.

    One way a New Yorker can build their real estate portfolio using DSCR loans is by using them to purchase multiple investment properties. For example, an investor could purchase a rental property using a DSCR loan, rent it out, and use the income generated from the property to make the mortgage payments. Once the property is generating a positive cash flow, the investor could then use the equity they’ve built in the first property to purchase another property, and so on. This strategy can help investors to grow their portfolio over time without having to save a large amount of money for a down payment on each property.

    It is important to note that DSCR loans are usually only available to experienced real estate investors with a good credit score and a track record of managing and maintaining rental properties. Additionally, lenders may have different requirements, loan terms, and fees for DSCR loans, so it is important for investors to shop around and compare offers from different lenders before applying.

    Bill Lyons

    Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 21 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up important with changes in the industry to deliver the most value to Griffin's clients.