Kansas DSCR Loans

What Is a DSCR Business Purpose Loan?

DSCR (debt service coverage ratio) no-income business purpose loans are a type of Non-QM loan designed specifically for investors where the ability to repay the loan is based on the property’s rental income. These loans differ from traditional residential and commercial loans because the borrower’s personal income isn’t considered. 

The key measurement to determine loan eligibility and amount in a DSCR business loan in Kansas is the debt service coverage ratio. Lenders calculate your DSCR by dividing the total gross rental income by the total debt service, providing them with a ratio. 

A DSCR of 1 indicates that the business earns enough income from a property to repay the mortgage debt. Most lenders prefer a DSCR above 1 to provide investors with a cushion in case of emergencies. 

Unlike traditional investment property loans that focus on the borrower’s personal income and credit history, Kansas DSCR business loans shift the emphasis to the performance of the property itself. This difference allows businesses and investors with strong cash flows and lower personal incomes to qualify for investment property loans without the traditional barriers.

Key Benefits of DSCR Business Loans in Kansas

DSCR business loans in Kansas offer a range of benefits to investors and businesses that make them potentially more attractive than traditional investment property loans, such as: 

• No property limit
• Faster closing times
• Unlimited cash out for flexibility
• Lower down payments
• No income verification
• Interest-only loan options available
• High loan amounts up to $5,000,000
• Close in the name of your LLC
• 1-4 unit residential properties

To qualify for DSCR loans in Kansas, investors don’t have to provide personal income documentation like tax returns or pay stubs. However, they must still meet the lender’s criteria, which varies. 

The most important requirement of a DSCR business loan in Kansas is the borrower’s DSCR. Typically, lenders like to see DSCRs of at least 1.25 to indicate a property’s strong financial performance. However, Griffin Funding allows for DSCRs as low as 0.75. Keep in mind that the lower your DSCR, the higher your interest rate might be, depending on the lender’s risk tolerance. 

Other key requirements of Kansas DSCR loans include the following: 

• Property type: DSCR loans are available for a variety of residential and commercial properties, including single-family homes, condos, townhomes, and 1-4 unit multi-family properties. 
• Credit score: While the emphasis of these loans is on a borrower’s DSCR, lenders typically require a credit score of 620 or higher to qualify. A higher credit score can get you better loan terms and interest rates. A credit score of 740 or higher will help you obtain the best rate.
• Property income: In order to qualify, the property must generate income. Lenders typically require borrowers to provide rental agreements or provide historical income data to ensure the property generates enough income to repay the mortgage. 
• Appraisal: DSCR lenders in Kansas will order an appraisal to determine the market value of the property. 
• Down payment: Most DSCR loan lenders in Kansas require a down payment of 20% or more. Your exact down payment amount will depend on other factors, such as your DSCR and credit history.
• Minimum loan amount: $100,000

Secure a DSCR Business Loan in Kansas

Leverage the property’s income potential to fuel your financial growth and diversify your portfolio. Let Griffin Funding be your trusted partner for DSCR loans in Kansas. We have a deep understanding of the Kansas market and a commitment to providing financial solutions to real estate investors to help you navigate the DSCR loan process smoothly. 

Get a mortgage by applying online or contacting us today to learn more about your investment property loan options.

Frequently Asked Questions: Kansas DSCR Business Loans

How much do you need to put down for a DSCR business loan in Kansas?

Kansas DSCR business loan down payment requirements typically range from 20-25% of the property’s purchase price. How much you’re required to put down depends on your DSCR. For instance, a lender may require individuals with a low DSCR to make a higher down payment to mitigate their risk. 

Your credit score can also impact the down payment requirement. Borrowers with lower credit scores may need a larger down payment, while those with higher credit scores and DSCRs can get the best rates. 

What is a good DSCR ratio in Kansas?

Most DSCR lenders in Kansas prefer borrowers to have a DSCR of 1.25 or higher because it indicates that the property generates enough rental income to repay the mortgage debt while allowing the borrower to have a cushion for other business-related needs. 

Griffin Funding allows investors to qualify for a DSCR business loan in Kansas with a DSCR as low as 0.75. However, this can make loan repayment more challenging, especially during periods of downturn. 

What does the DSCR loan application process look like?

DSCR loan applications are typically more streamlined than traditional investment loans. Griffin Funding aims to complete the process in 30 days or less, offering a streamlined application process. 

To apply for a DSCR loan in Kansas with Griffin Funding, we’ll have an initial discovery call to discuss your unique needs and determine if a DSCR loan is right for you. Then, you can complete our online application or apply with one of our loan experts on the phone. 

Behind the scenes, we’ll perform the underwriting process to verify the information you’ve provided on your application, calculate your DSCR, and run a credit check. 

Once your loan application is approved, we’ll schedule a date and time for closing and loan funding.