Where We Lend

Interested in getting a DSCR loan in Virginia? Griffin Funding serves investors across the state, so whether you’re looking for a DSCR loan in Richmond or Lynchburg, we can help. Some of the areas we serve include:

  • Virginia Beach
  • Fairfax
  • Chantilly
  • Norfolk
  • Arlington
  • McLean
  • Upperville
  • Waterford
  • Dunn Loring
  • Richmond
  • Alexandria
  • Roanoke
  • Portsmouth
  • Great Falls
  • Vienna
  • Middleburg
  • Oakton
  • Aldie

What Are Virginia DSCR Loans?

Debt service coverage ratio (DSCR) loans are an advantageous alternative to traditional Virginia home loans. You don’t have to go through the traditional qualification process that you typically need to go through to get a mortgage because these loans have much more flexible underwriting terms.

With traditional home loans, your income, assets, and employment are used to determine if you’re an eligible borrower. With DSCR loans, your eligibility is based on your DSCR, which is the ratio of annual rental income to annual debt. You don’t have to provide proof of income or employment history verification for DSCR loans in Virginia.

DSCR loans are specifically designed for real estate investors. In fact, you can only use a DSCR loan to purchase rental property because your loan eligibility is based on rental income. If you’re looking for a mortgage you can use to purchase an owner-occupied home, you’ll need to apply for a different type of loan.

How Is DSCR Calculated?

Your DSCR is the most important number when it comes to Virginia DSCR loans. Lenders calculate your DSCR to make sure it meets a certain threshold that’s required to secure a loan. This threshold varies from lender to lender, but the DSCR formula is always the same. Here’s how it works:

  1. First, we have to figure out your rental income. Rental income is determined using lease agreements as well as an appraisal from a licensed appraiser. The lower of the two numbers is used as your rental rate. Alternatively, you may provide 12 months of rental income history instead of getting an appraisal.
  2. Next, we’ll calculate your annual debt for the property. We do this by combining the payments you make on the principal, interest, taxes, insurance, and any HOA fees you’re responsible for.
  3. The last step is dividing your annual rental income by your annual debt. The resulting number is your DSCR, which is the number lenders use to approve or deny you for the loan.

If you’d like to try our quick and easy online DSCR calculator, you can get an instant calculation to help you decide whether a DSCR home loan is the right choice.

What Is a Good DSCR Ratio?

As we mentioned before, different lenders look for different minimum DSCR ratios from borrowers. Typically, lenders will require that you have a DSCR of at least 1.25 to take out a loan as a real estate investor. If your DSCR is higher than that, you may be able to lock in a lower interest rate or make a smaller down payment.

Griffin Funding is a little different when it comes to our DSCR ratio requirement. You can have a DSCR of less than 1.0 and still qualify for DSCR loans in Virginia through Griffin Funding. However, loans with a DSCR below 1.0 require 12 months of reserves, while loans with a DSCR of 1.0 or higher require just 6 months of reserves.

If your DSCR isn’t high enough for standard DSCR loans in VA, you can apply for interest-only loans or other types of non-QM loans through Griffin Funding. We even offer a DSCR HELOAN that allows you to use your investment property’s equity to help qualify.

Virginia DSCR Loan Benefits

So, why would you want to opt for a DSCR loan in Virginia? DSCR mortgage loans in Virginia offer several benefits, such as increased flexibility that gives more people an opportunity to invest in property. But there are also many other benefits including:

  • Closing times can be quicker since there’s less paperwork involved
  • You can qualify without proof of income or employment history verification
  • Down payments start at just 20%
  • We offer competitive interest rates based on DSCR
  • DSCR loans can be used for both short-term and long-term rental properties
  • Cash-out refinance options (Use cash from your current investment property to buy more properties)
  • Interest-only options available
  • 40-year or 30-year fixed DSCR loans available
  • Loan amounts up to $20,000,000
  • Credit scores as low as 620

Unsure what type of loan is the best solution for you? Our loan specialists are happy to help you through the process so you can find a loan program that benefits you most.

DSCR Loan Requirements in Virginia

In order to qualify for a Virginia DSCR loan and receive your funding, you’ll have to meet the basic DSCR loan requirements in Virginia:

  • DSCR: Your DSCR ratio has to be high enough that a lender agrees to loan you money. While 1.25 is generally considered to be a good DSCR, and is the bare minimum required by many traditional lenders, Griffin Funding will review applicants with a DSCR below 1.0 as long as the borrower’s profile shows other strengths.
  • Down payment: To meet Virginia DSCR loan requirements, you’ll also need to provide a sufficient down payment. At Griffin Funding, we offer DSCR loans with down payments as low as 20% for well-qualified buyers. However, if you are overcoming recent credit events, have a low DSCR, or if the desired property does not appraise well, you may need to make a larger down payment.
  • Credit score: A minimum credit score of 620 is required. However, the higher your score the better the chances at receiving a favorable approval with a low down payment. The average approved borrower that meets the DSCR loan requirements in Virginia boasts a 732 credit score. For help boosting your credit score and gaining further knowledge about the loan programs offered by Griffin Funding, you can download the Griffin Gold app.
  • Investment property: Only income-producing investment properties are eligible for DSCR loans in Virginia. You cannot finance a primary residence or fixer-upper with a DSCR loan.
  • Appraisal: An appraisal will be performed on your desired property to assess its current market value (and the rental market of the surrounding area) and determine its expected rental income.

Keep in mind that you won’t be required to submit proof of income or employment history verification when applying for DSCR loans in Virginia. These requirements are typically the same no matter what part of the country you’re in, so whether you’re applying for a DSCR loan in Richmond, VA or anywhere else in the nation, the requirements will be nearly identical.

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Find Out If You Qualify for a Virginia DSCR Loan

Are you interested in applying for a Virginia DSCR loan? These loans are an excellent opportunity to expand your portfolio as a property investor, especially if you can’t qualify for a traditional loan. You can submit an online application if you’re ready to move forward, or you can learn more about the loans we offer at Griffin Funding by giving us a call at (855) 394-8288 today.

Frequently Asked Questions

What is the current DSCR loan rate in Virginia?

Any DSCR mortgage loan in Virginia typically comes with competitive rates. However you’ll need to keep in mind that the rates are still typically higher than those seen in conventional mortgage loans.

The exact rate you’re eligible for will vary depending on several criteria, including your credit score, DSCR, DTI ratio, down payment/cash reserves, the property’s rental value, and whether you have any experience in managing or investing in real estate.

Are DSCR loans non-QM loans?

One of the biggest benefits of DSCR loans is the fact that they’re classified as non-QM loans. Non-QM loans are loans that don’t require the same extensive qualifications as conventional loans do—which means you don’t have to submit proof of income and employment history verification to secure a loan.

In addition to DSCR loans, there are several other types of non-QM loans you can apply for with Griffin Funding: 

  • Bank statement loans allow you to qualify for a loan based on information available on your bank statements. Instead of using traditional pay stubs or tax returns to show your ability to repay the loan, you will use a series of bank statements.
  • Asset-based loans give you a chance to qualify based on liquid assets, which is a great option for retirees, investors, and self-employed borrowers. And then there are Because you are using your liquid assets to help qualify, there is no need to provide the traditional income verification.
  • Recent credit event loans , which  are a unique option for those who have suffered a major hit to their credit and don’t have a chance of qualifying for other types of loans. Recent bankruptcy, foreclosure, loan default, debt restructuring, and other credit events will all be considered when applying for a recent credit event home loan.

What are the downsides of a DSCR loan?

DSCR loans can be a great option for those who struggle getting approved for conventional mortgage loans. However, there are some points to keep in mind while deciding if it’s the right choice for you:

  • DSCR loan rates in Virginia, though competitive, are typically higher than the rates seen when comparing a DSCR loan vs conventional loan.
  • Because there is always going to be a minimum of 20% required for a down payment, you may need to have hefty cash reserves to qualify for pricier purchases.
  • If your local rental market is stagnant, or if your properties are sitting vacant, you may have difficulty meeting the minimum DSCR.

Is it hard to get a DSCR loan in Virginia?

One of the best benefits of DSCR mortgage loans is that they’re available for both new and experienced investors. As long as you meet a few basic requirements, you can start working with a loan agent to see what Griffin Funding can do for you.

Keep in mind that, while many lenders do offer DSCR loans, they may not specialize in them. Working with a knowledgeable, specialized DSCR lender like Griffin Funding gives you the best chances at locking in a competitive approval to help build your real estate investment portfolio.

How can I get the best rate on a DSCR loan?

Even though the rates for Virginia DSCR loans can be very competitive, it’s best to be educated on the different scoring criteria before you apply. Here are some tips to give your application the best shot at a great approval:

  • Work on getting your DSCR up to at least 1.00-1.25 by boosting rental revenue and lowering annual costs.
  • Optimize your personal credit report by disputing any derogatory items, paying down excessive debt, and making payments on time.
  • Gather the necessary paperwork: Rent rolls, operating statements, property tax bills, and insurance declarations will all be helpful.
  • Make sure that you are trusting an experienced DSCR lender, like Griffin Funding, who will take a holistic approach to your application and work with your strengths – instead of focusing on your weaknesses – to get the best approval possible.