What Is a Commercial DSCR Loan?

A commercial DSCR loan is a non-qualified mortgage loan based on your property’s cash flow using the debt service coverage ratio, or DSCR. The DSCR Is the ratio of the property’s gross income compared to it’s annual mortgage debt—also known as the debt service.

To find the property’s DSCR, you’ll first need to take the total gross income and divide it by the annual mortgage debt to get your DSCR.

A DSCR over 1 means that the borrower should be able to cover the mortgage based on the property’s cash flow, while a DSCR under 1 means that they’re more likely not to be able to afford payments.

In most cases, a lender will want a DSCR of over 1 to make sure that the borrower can realistically afford the loan. However, some lenders, like Griffin Funding are more flexible.

A commercial DSCR loan differs from a conventional loan in a few ways:

  • It is a no-income loan.
  • Eligibility is based on the property’s cash flow and more specifically, DSCR.
  • It has an easier approval process.
  • The loan is in the name of the LLC or other business entity.

Depending on your circumstances, this may make a NV commercial DSCR loan the best-suited loan for you.

Who Should Consider a Commercial DSCR Loan in NV?

There are several reasons to consider applying for a commercial DSCR loan in Nevada:

  • If you are having a difficult time qualifying for a traditional income-based loan.
  • You are looking for quicker closing times.
  • If you want to expand your portfolio by investing in multiple real estate properties in NV.
  • You are a foreign investor without tax returns.
  • You are self-employed or don’t have access to paystubs or don’t want to verify your employment.
  • You want to separate your personal information from your business operations.

Commercial DSCR loans in Nevada allow you to qualify based on the property’s cash flow—with no regard for your personal income—which makes it an excellent option for expanding on commercial investments if you otherwise wouldn’t have qualified. Commercial DSCR loans are not made to natural persons but rather to business entities such as LLCs.

What Are the Requirements for a Nevada Commercial DSCR Loan?

When banks are lending for commercial properties, they will look for ones that have a positive ratio, usually a DSCR of 1.25 or higher. However, Griffin funding will allow investors to qualify for a commercial DSCR loan with a ratio as low as .75 depending on the amount of cash reserves available on hand—you’ll need to be able to make the required down payment. While you may not be able to qualify with other lenders, this flexibility may allow you to take advantage of a commercial real estate opportunity you otherwise wouldn’t be able to.

Another factor to keep in mind when it comes to eligibility for commercial DSCR loans in Nevada is the types of properties they can be applied to. The loan must also be used only for commercial real estate in the state of Nevada. This may include 1-4
Unit real estate investment properties that are used for business purposes. It does not apply to property used for personal use / primary residence and commercial DSCR loans must made to LLCs or other business entities and not a natural person.

However, if you are looking for DSCR loans for residential properties, we have those too in other states.

What Are the Advantages of a Commercial DSCR Loan?

Some of the benefits of a DSCR loan for investors are:

  • Generally faster closing times.
  • Proof of income isn’t necessary to close a loan. Which makes it generally easier to qualify for.
  • No limit on the number of properties that can be invested in.
  • Large loan amounts up to $5,000,000
  • Loans that are interest-only.
  • No reserves required for cashout loans, and only 6 months required on a DSCR above 1.
  • Down payments of as little as 20%.
  • Ability to open a loan as a separate entity.
  • Less paperwork than a standard loan.

With a NV commercial DSCR loan, you may be able to secure the funding you need much more easily.

How to Get a Nevada Commercial DSCR Loan

To get approved for a Nevada Commercial DSCR loan your property must have a DSCR of .75, and you must plan on investing in commercial real estate. Depending on your DSCR ratio, you may need some cash reserves. For a ratio less than 1, 12 months of reserves are necessary. Typically, fewer reserves are needed the greater the ratio is. Although we are lending to your LLC or other business entity we do require a personal guarantee.

When applying for a loan, look for a trusted commercial mortgage lender in Nevada. Griffin Funding follows a streamlined 10-step process for applying and funding your loan, which we strive to complete as efficiently as possible. Our lending process relies on our experienced agents and cutting-edge technology to provide you with a loan to fit your needs. Often, we can complete the mortgage process within 30 days.

Begin the application online or request a free quote today!

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Apply for a Commercial DSCR Loan in Nevada

If you’re seeking funding for commercial property in Nevada, a DSCR commercial loan may be the best option available to you. To find out whether you qualify for a Nevada commercial DSCR loan, submit an application online today or call us to speak with one of our loan specialists who can walk you through the process.

We can work with you to determine whether you qualify, help you calculate your DSCR, and find the best loan solution for you.

And keep in mind, if you plan to expand beyond commercial real estate, we also provide DSCR loans for residential properties which have many of the same benefits a commercial DSCR loan in NV would have.