What is an Oregon Commercial DSCR Loan?
A commercial DSCR loan is a type of non-qualified mortgage loan based on your property’s cash flow using the debt service coverage ratio as the main metric for loan qualification. A commercial DSCR loan differs from a conventional loan in a few important ways:
- It is a no-income loan.
- It is more likely to have lower interest rates and points than a private loan.
- It generally takes much less time to get approval.
- It has an easier approval process.
- The lender lends to a business entity such as an LLC and not to a natural person.
As a real estate investor, you know all about securing the best terms and that applies to commercial real estate investment property loans too. With a commercial DSCR loan, you may not only have a better chance at qualifying for real estate funding in the first place but get better terms as well.
Who Should Apply for a Commercial DSCR Loan in Oregon?
Thinking that an OR commercial DSCR loan might be a good fit? Below are some highlights to consider.
You might be the right type of borrower for a commercial DSCR Loan in Oregon if:
- You want to expand your portfolio by investing in multiple properties in Oregon.
- You are a foreign investor without tax returns.
- You are having a difficult time qualifying for a traditional income-based loan.
- 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.
- You are looking for quicker closing times.
- You want the flexibility of using short or long-term rentals.
Still unsure if this is the right loan program for you? Our loan specialists are extensively knowledgeable about Oregon commercial DSCR loans and can help you find the right loan solution for you.
How Do OR Commercial DSCR Loans Work?
Here are some key takeaways you should know about how Oregon commercial DSCR loans work:
- The main factor for qualification is DSCR. Your lender will calculate DSCR based on the property’s annual gross rental income divided by the annual mortgage debt.
- Your personal income or financial circumstances will not play a factor in qualifying for a DSCR loan.
- Commercial DSCR loans in Oregon cannot be used for primary residences or properties used for personal use . They can only be used for commercial property such as 1-4 unit real estate investor properties that are for business purposes. We lend to your business entity and not to you as a natural person.
Apply online today for a commercial DSCR loan in Oregon to get the process started.
What DSCR Do Borrowers Need for Commercial Loans?
When considering a borrower for a commercial DSCR loan, lenders typically want to see a DSCR of 1.25 or higher—which indicates that the borrower should be able to make their loan payments without issue.
While this is the general standard, Griffin funding strives to offer more flexible terms to provide opportunities for investment to more borrowers. In some cases, we allow investors to qualify for a commercial DSCR loan with a ratio as low as .75.
How Is DSCR Calculated By Lenders?
DSCR is calculated by dividing the annual gross rental income and the annual mortgage debt. First, you need to calculate gross rental income which is found by deducting the operating expense, then divide by the total debt to get your DSCR.
DSCR = Annual Gross Income / Total Annual Mortgage Debt
Let’s go through a general example of how DSCR is calculated by your lender. First, you need to calculate gross rental income which is found by deducting the operating expense, then divide by the total debt to get your DSCR.
A DSCR over 1 indicates that the borrower will be able to cover the loan payment with ease, while a DSCR under 1 indicates that they may not have the necessary funds to do so—in the most simple terms. In most cases, a lender will want a DSCR of over 1 to make sure that the loan will be adequately covered.
However, as mentioned above, Griffin Funding allows for DSCRs as low as .75.
Are DSCR Loans Good Commercial Real Estate Investment Loans?
Whether or not a DSCR loan is a good investment depends on the borrower and the real estate property in question, but typically, commercial DSCR loans offer some notable advantages, such as:
- Generally faster closing times.
- 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 cash out loans, and only 6 months required on a DSCR above 1.
- Down payments of as little as 20%.
- Less paperwork than a standard loan.
- Lend in the name of an LLC or other business entity.
If you have any questions about whether a DSCR loan is right for you, Griffin Funding provides experienced loan specialists who are happy to provide guidance. Otherwise, you can apply here and see if you qualify.
Expand Your Investment Portfolio with a Commercial DSCR Loan
Ready to expand your commercial real estate investments? Griffin Funding is here to help you accomplish that goal. Our commercial DSCR loans in Oregon give more borrowers the opportunity to take advantage of commercial real estate investment opportunities with more flexible underwriting terms.
We always strive to provide our customers with competitive rates and five-star, white-glove service. Throughout the loan application process, you’ll find that we’re focused on helping you find a solution that best suits your borrowing circumstances and move things along as quickly as possible. We have a streamlined process and rely on the latest technology to ensure our lending process is quick, transparent, and customer-friendly.
If you still have questions regarding OR commercial DSCR loans you can reach us at (855) 394-8288. Or, if you’re ready to get the process started, apply with us online.
Note that we also offer DSCR loans for residential properties which offer many of the same benefits, only they’re applied to residential real estate.