What is a DSCR Business Purpose Loan?

A DSCR business purpose loan (DSCR BPL) is a type of non-QM loan that’s based on the cash flow value of your property rather than your income. If you have a suitable debt-service coverage ratio, you can take out a DSCR business purpose loan to invest in property. Business purpose is just that—the property is used for business purposes and it’s an investment that brings in rental income. It is not a property that is owner-occupied.

If you’re having trouble securing a traditional loan or want to avoid high interest rates, DSCR business purpose loans in District of Columbia offer an alternative path to investing in real estate.

The debt-service coverage ratio is the amount of annual gross rental income a property provides compared to the annual mortgage debt. The annual mortgage debt of a property includes the principal, interest, taxes, insurance, and HOA fees. When you apply for a DSCR loan, a DSCR lender in Washington, DC will look at this ratio to determine whether you’re eligible for a loan.

Keep in mind that DSCR loans aren’t always the best option. Before you apply for a DSCR loan, you should read up on the pros and cons of DSCR loans to determine if it’s the right fit for you.

Advantages of DSCR Loans in Washington, DC

There are several advantages to taking out a DSCR loan in Washington, DC, especially if you have trouble qualifying for a private loan. But even if you can qualify for private loans, Washington, DC DSCR business loans may be a better option for you.

Accessibility is one of the biggest benefits of Washington, DC DSCR loans. DSCR lenders don’t look at your personal finances and credit score when you apply — they look at your debt-service coverage ratio. As long as your DSCR falls within a certain range, you can usually secure a loan. Most lenders prefer a DSCR over 1, but Griffin Funding has a minimum requirement of 0.75, and will even consider DSCRs below .75 on an exception basis with compensating factors.

Getting approved for a mortgage loan is typically a long process, but that’s not the case with DSCR loans. DSCR loans have a streamlined approval process, so you can quickly secure a loan and start investing as soon as possible. With the added benefit of unlimited cash-out, you can access money when you need to make repairs or maintain rental properties.

Adding more properties to your investment portfolio can be difficult, especially if your income is limited. But with a DSCR commercial loan in Washington, DC, there’s no limit on the number of properties you can purchase. You can also use DSCR loans for both long-term and short-term 1-4 unit residential rental properties.

As long as you bring in enough annual gross rental income to cover your annual mortgage debt, you can continue securing loans and investing in new rental properties. This is why DSCR loans for Airbnb have become increasingly popular in recent years.

Washington, DC DSCR Loan Application Process

Applying for Washington, DC DSCR business loans is a fairly simple process, but it starts with choosing the right mortgage bank. Fortunately, you can apply for a Washington, DC DSCR loan through Griffin Funding.

The first step in securing a DSCR loan is filling out a loan application. You can apply with the online loan application on Griffin Funding.  You’ll also need to present property financial statements and an appraisal to your lender to qualify for a DSCR business loan in Washington, DC.

Next, you’ll need to calculate your DSCR and fill out a rent schedule. This is the part where you learn about your annual rental income, which will ultimately determine your interest rate. To calculate your DSCR, your lender will divide your rental income by the debt obligation over the period of a month.

Once you’ve applied and figured out your DSCR, we’ll offer you an interest rate. You can lock in your interest rate when you’re ready and move on to the next step — getting approved. Simply close the loan with Griffin Funding after locking in your interest rate. Once your loan is approved, we’ll deposit the funds into your account as soon as possible.Keep in mind there are DSCR loan down payment requirements, and application approval depends on several factors. You talk with a DSCR lender to learn more about the application process and loan requirements.

Work With a DSCR Lender in Washington, DC

Applying for a DSCR loan can be a smart move for real estate investors. With a DSCR loan, you can speed up the loan application and approval process and get approved with a credit score as low as 620.

Choosing the right DSCR lender in Washington, DC is the first step. Griffin Funding can help you secure the loan you need to start investing in real estate. To learn more or apply for a Washington, DC DSCR loan, contact us or fill out our online application today.

Frequently Asked Questions: Washington, DC DSCR Business Loans

How does a DSCR loan differ from a traditional mortgage loan?

DSCR loans are different from traditional mortgage loans because they’re not based on your personal finances and credit score. Instead, DSCR loans are determined by your annual rental income compared to your annual mortgage debt. This means that DSCR loans are more accessible, offer faster approval times, and allow you to invest in several properties at once.

What is the minimum loan amount for a DSCR BPL loan in DC?

Griffin Funding requires a minimum loan amount of $100,000 and will lend up to $5,000,000.

How do you qualify for a DSCR business purpose loan in Washington, DC?

To qualify for a DSCR business purpose loan in Washington, DC, you need to have a DSCR of at least 0.75 (below .75 can be considered on an exception basis). While Griffin Funding has a minimum DSCR requirement of 0.75, other lenders may have minimum requirements as high as 1.2 or 1.25. You’ll also need to make a down payment, which is generally between 20% and 25%. You should talk to your lender to learn more about DSCR loan requirements before applying for a loan.

Should I work with a specialized lender for DSCR loans in Washington, DC?

Absolutely. Working with a specialized DSCR lender in Washington, DC is the best way to get a loan that works for you. Griffin Funding can help you find a qualified lender in Washington, DC, so you can secure a loan and start investing in real estate as soon as possible. To learn more about Washington, DC DSCR business loans, contact Griffin Funding to consult an expert.