What Is a DSCR Business Purpose Loan?

DSCR stands for debt service coverage ratio, a financial metric DSCR lenders in Mississippi use to determine a borrower’s ability to repay a mortgage on an investment property. These commercial loans are designed for investors and are for business purposes only and come with several advantages compared to traditional investment loans. 

With DSCR investment property loans in Mississippi, borrowers can qualify for a mortgage based on the property’s rental income rather than using their own personal income. That means you don’t have to provide the lender with pay stubs or tax returns that might not accurately reflect your unique financial situation.

You can calculate your DSCR by dividing your gross rental income by the mortgage debt. A DSCR of 1 means you earn enough rental income to repay the debt.

Benefits of Getting a DSCR Business Loan in Mississippi

Mississippi DSCR no-income business loans aren’t like traditional commercial loans. Instead, they allow you to qualify based on the rental property’s income rather than your own. There’s no need to provide your lender with income documentation. DSCR business loans in Mississippi offer borrowers the following benefits: 

  • No limit to the number of properties: There’s no limit to the number of properties you finance with a DSCR business loan, allowing you to expand your portfolio faster. 
  • Faster closing times: Because you don’t need to provide documentation of your income, the process is much more streamlined with DSCR loans. 
  • Unlimited cash out: DSCR loans allow you to take unlimited cash out, providing you with a better cash flow. 
  • Types of rental properties: DSCR loans allow you to finance both long- and short-term rental property from 1-4 unit multi-family homes to Airbnbs. 
  • Interest-only loan options: Some DSCR loans allow for interest-only payments, lowering your monthly payments.
  • Large loan amounts: With these loans, you can finance larger purchases up to $5,000,000.

How to Apply for a DSCR Business Loan in Mississippi

Requirements for applying for a DSCR commercial loan in Mississippi vary by lender. However, there are several common criteria to keep in mind when applying with your chosen lender, such as:

  • Property type: DSCR loans are available for residential and commercial properties. However, Griffin Funding only allows you to use these loans for investment properties with 1-4 units only. 
  • Minimum loan amount: $100,000
  • Minimum DSCR: Lenders can choose a minimum DSCR based on their risk tolerance. Most lenders require a DSCR of 1.25 or higher because it means the rental property generates enough income to repay the mortgage debt while providing the borrower with an additional cash cushion. However, Griffin Funding allows for DSCRs of 0.75 depending on other financial factors, such as the borrower’s credit history and down payment. Keep in mind that the lower your DSCR, the more you’ll pay in interest. 
  • Credit Score: Aim to have a credit score of at least 620 when applying for a DSCR loan in Mississippi. Lenders like to see that you’re someone who repays their debts on time. A higher credit score can also help you qualify for lower interest rates. 

If you meet these criteria, you can apply directly with Griffin Funding either online or by contacting us today. We pride ourselves on a straightforward, streamlined lending process that begins with a discovery call. 

During this initial call, we’ll discuss your unique financial needs and situation to determine if a DSCR loan is right for you. Then, once you find a property, you can apply on our website or on the phone with one of our mortgage experts. 

We strive to complete the mortgage process in 30 days or less.

See if a Mississippi DSCR Business Loan Is Right for You

A DSCR loan in Mississippi can help you purchase an investment property to grow your wealth using the property’s projected rental income rather than personal income, providing opportunities for all types of investors.

Get a mortgage with Griffin Funding by applying online or contacting us today.

Frequently Asked Questions: Mississippi DSCR Business Loans

What is a good DSCR ratio in Mississippi?

A good DSCR ratio is anything above 1 because it indicates your rental property generates enough income to repay the mortgage debt and then some. However, some lenders, such as Griffin Funding, allow for lower DSCR ratios, but it may mean getting a higher interest rate and making a larger down payment. 

Can I live in a home bought with a DSCR loan?

DSCR loans in Mississippi are for business purposes and investment property only, meaning you can’t live in a home bought with a DSCR loan. They’re not designed for primary residences or vacation properties. In fact, they’re not for any personal use at all. If you want to purchase an investment property and live in it, you’ll need a different type of loan. 

If you’re looking to purchase a primary residence and want more flexible lending requirements, consider our Non-QM loans for residential, personal-use properties. With bank statements and asset-based loans, you can purchase a primary residence without W2s or tax returns.

What types of properties can I purchase with a Mississippi DSCR business loan?

Not only is there no limit on the number of properties you can purchase with a DSCR business loan in Mississippi, but you can also finance a variety of different types of properties, ranging from residential to commercial, including:

  • Single- and multi-family homes
  • Business properties
  • 1-4 unit rental properties

Keep in mind that Griffin Funding only offers these commercial loans on 1-4 unit residential investment properties, and as the investor, you can’t live in them. Contact us today for a full list of different types of properties you can finance with a DSCR loan in Mississippi.