DSCR Loans in Georgia

What Are Georgia DSCR Loans?

While DSCR loans are used to purchase homes, they’re different from other Georgia home loans. These no doc loans in Georgia use your DSCR instead of your assets and income to see if you qualify for a loan. Your debt service coverage ratio is the amount of rental income a rental property provides annually versus the annual cost of making loan payments on that property.

DSCR loans are non-QM loans, which means you don’t have to go through the typical mortgage qualification process to secure them. Normally, you’d have to provide information such as proof of income and employment history verification to secure a mortgage. DSCR loans allow real estate investors to invest in multiple rental properties as long as the annual rental income generates enough to pay for the annual debt obligations of the property. Because DSCR loans are based around rental income, these commercial loans in Georgia are reserved for rental properties and not owner-occupied properties.

How Do You Calculate DSCR?

Calculating your DSCR is easy with our DSCR calculator. This valuable tool can help investors quickly estimate their property’s DSCR and gain insights into their eligibility for DSCR Loans. 

In order to qualify for DSCR loans in Georgia, you’ll need to have an acceptable debt service coverage ratio. Your debt service coverage ratio (DSCR) is calculated by dividing your annual rental income by the annual debt obligations that come with a rental property. If your rental income and debt obligation are the same, you have a DSCR of 1.

The DSCR formula is: Annual rental income ÷ Annual mortgage payments = Debt service coverage ratio. To clarify even further, here’s a step-by-step breakdown of how we calculate DSCR:

1. The first step is figuring out your annual rental income. To do this, we use lease agreements and an appraiser who completes a rent schedule on Fannie Mae Form 1007. We take the lower of the two numbers and use that as your rental rate. Instead of using an appraiser, you can also provide a 12-month history of rental income.
2. Once we know your annual rental income, we calculate your annual debt. Your annual debt is the principal, interest, taxes, insurance, and HOA payments you make throughout the year.
3. After we have both numbers, we’ll divide your annual rental income by your annual debt to calculate your DSCR. A DSCR above 1 indicates that your annual rental income exceeds your annual debt.

For individuals with a DSCR too low to secure a loan, asset-based loans and other non-QM loans are available.

Download the Griffin Gold app today to use the DSCR calculator and other tools to assess your property’s DSCR and other financial factors. 

DSCR Example

If you’re still not quite sure how DSCR is calculated, here’s a real-world example that can help clear up any confusion. 

Let’s say you have an annual rental income of $50,000, but it costs you $40,000 each year to keep up with loan payments, taxes, and insurance. In this case, you would calculate your DSCR by dividing $50,000 by $40,000, which will leave you with a DSCR of 1.25. This means that your rental income is high enough that you can make good on your annual debt and still have money left over at the end of the year.

As we mentioned previously, there are other types of non-QM loans you can apply for if your DSCR is too low. Options such as bank statement loans and asset-based loans can be good options for borrowers looking for alternative ways to verify their income.

Advantages of Securing a Georgia DSCR Loan

For property investors, there are many advantages of securing a Georgia DSCR loan instead of a traditional loan. First off, you don’t have to worry about providing proof of income or employment history verification. The simplification of the application process actually means that DSCR loans in Georgia tend to move a little quicker, which means shorter closing times.

When you secure a DSCR loan from Griffin Funding, we do our best to provide competitive interest rates on your loan. You don’t have to sacrifice a reasonable interest rate to secure a loan to invest in rental properties.

Not only do we provide DSCR loan amounts up to $5,000,000, but we also have no limit on the number of properties you can invest in. If you want the funding and freedom to invest in multiple rental properties, DSCR loans in GA are an excellent solution.

DSCR Loan Requirements in Georgia

To qualify for DSCR loans in Georgia, you need to be a borrower who’s investing in rental properties. DSCR loans can’t be used to purchase owner-occupied homes, so home buyers interested in purchasing a place for themselves will need to consider one of our other non-QM loans instead such as an interest-only loan or recent credit event loan. To qualify for a DSCR loan in Georgia, you’ll also need to have a high enough DSCR, a minimum credit score, as well as the ability to make a down payment of at least 20%. 

Applying for debt service coverage ratio loans in GA is easy thanks to Griffin Funding. If you want to find out more about DSCR loans, call us at (855) 394-8288 to get started today. Or, if you’re ready to move forward, you can fill out our online application to begin the approval process.

What DSCR Do Lenders Look For?

If you want to apply for a DSCR loan, it’s important to know what’s required of you. First and foremost, Griffin Funding requires a DSCR of at least 0.75 to secure a loan, while most other lenders consider  1.25 a good DSCR. Commercial lenders in Georgia use your DSCR to determine if the rental income of a property is enough to cover loan payments and taxes. In some cases, Griffin Funding may consider a no-ratio DSCR loan with a larger down payment.

In addition to ensuring you meet the DSCR requirement, you may also be asked to provide additional documentation throughout the application process to confirm all the information used for the calculation.

Areas We Serve

Griffin Funding provides DSCR loans to borrowers throughout the state, including the following areas:

Get Started with Your Georgia DSCR Loan

Securing funding to purchase rental properties can be a tough process, but DSCR loans can help investors do just that without W-2s, tax returns, and pay stubs. 

At Griffin Funding, we offer Georgia DSCR loans with competitive interest rates and down payments as low as 20%. Our DSCR loans are an advantageous option for helping you invest in Georgia real estate. To learn more about our DSCR loans in Georgia, call us at (855) 394-8288 or apply online today.

Frequently Asked Questions: DSCR Loans in Georgia

Is it hard to get a DSCR loan in Georgia?

Obtaining a DSCR loan in Georgia or any other location involves specific criteria and considerations. While DSCR loans are designed for income-generating properties, making them more accessible for investors, there are factors that may impact how easy it is to obtain these commercial loans in Georgia. Some considerations include: 

• Property evaluation: Commercial lenders in Georgia assess the income potential of the property, looking at factors such as rental income and operating expenses. The property’s ability to generate sufficient income to cover debt obligations is crucial. 
• Experience in property management: While it’s possible to start investing in real estate with a DSCR loan, some lenders prefer borrowers with experience in managing income-generating properties. On the other hand, other lenders like Griffin Funding work with investors of all types to ensure these loans are accessible whether you’re a new or veteran investor. 
• Documentation requirements: Like any loan, DSCR loans come with documentation requirements, primarily for the property. Being prepared with comprehensive financial documentation can streamline the application process. 

How many times can I use a DSCR loan?

One of the advantages of DSCR loans is the flexibility they offer regarding the number of properties they allow you to invest in. Unlike some loan types that may limit the number of simultaneous loans, DSCR loans typically have no set limit on how many properties you can finance at once. Therefore, there’s no limit on how many times you use a DSCR loan. 

What are the downsides of a DSCR loan?

While DSCR loans have their advantages, there are also cons to consider, such as: 

• Larger down payments: Most lenders in Georgia require a down payment of at least 20% for DSCR loans. 
• Higher interest rates: DSCR interest rates can be higher than other loan types since DSCR loans and no doc loans in Georgia can potentially carry more risk for the lender. 
• For rentals only: Georgia DSCR loans are designed for rental properties. They can’t be used for primary residences or fix-and-flip projects.
• Vacancies: Vacancies in rental properties can impact cash flow, and lenders don’t assess your ability to repay the loan based on these periods. Consistent cash flow is crucial to ensure you can repay your loan.