DSCR Loans Georgia

What Are Georgia DSCR Loans?

While DSCR loans are used to purchase homes, they’re different from other Georgia home loans. Georgia debt service coverage ratio loans 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 property investors to invest in multiple rental properties as long as the annual rental income is enough to pay for the annual debt obligations of the property. Because DSCR loans are based around rental income, these loans are reserved for rental properties and not owner-occupied properties.

How Do You Calculate DSCR?

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.

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.

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 annually to keep up with loan payments, taxes, and insurance. You would then divide $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. Bank statement loans are one of many options offered by Griffin Funding.

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.

How Do You Qualify for a DSCR Loan 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 homebuyers will need to consider one of our other non-QM loans instead such as an interest-only loan or recent credit event loan. You’ll also need to have a high enough DSCR, a minimum credit score, as well as the ability to make a down payment.

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 require 1.25. Lenders use your DSCR to determine if the rental income of a property is enough to cover loan payments and taxes. 

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.