DSCR Loans in New Jersey

At Griffin, we can provide financing services to all areas of New Jersey. Some of the areas we serve include:

DSCR loans in New Jersey are designed for real estate investors. A DSCR real estate loan uses the income generated by an investment property to determine if the cash flow is sufficient to cover the servicing debt. For the purposes of a DSCR loan, an investment property is one that generates income from tenants.

Essentially, DSCR loans allow New Jersey real estate investors to bypass the process of applying for a conventional loan. Instead, they can qualify for financing based on their DSCR, which measures a company’s cash flow versus its debt obligations.

This offers enhanced flexibility compared to traditional sources of financing, including conventional home loans and even hard money loans, because it’s the income potential of the property itself that is helping to qualify you for the loan.

A traditional loan looks at the income and debt-to-income (DTI) ratio of the person that’s seeking to buy an investment property. A borrower that has an appropriate DTI ratio is considered as qualified for the loan because they demonstrated their ability to safely borrow. However, not all borrowers want to use their personal income to qualify for investment property loans for various reasons. In these cases, a debt service coverage ratio loan offers an alternative to traditional lending.

When you apply for a DSCR loan in New Jersey, the rate and terms of the mortgage will largely be determined by your DSCR. You can use a DSCR calculator to figure out the total income of the property and compare that against the amount needed to pay the mortgage and related costs of ownership. If the property generates that much or more in income, you can potentially secure good terms on a DSCR loan.

How to Calculate DSCR

You can use a simple formula or our free DSCR calculator to figure out if the target property generates enough income for a DSCR loan. The steps to calculate DSCR are as follows:

1. Calculate the gross income from the property.
2. Calculate the annual property debt including mortgage principal, taxes, interest, insurance and any other applicable fees.
3. Divide the annual gross rental income by the annual debt to determine the ratio.

You can qualify for a DSCR loan in New Jersey if you can demonstrate the following criteria:

Who Are DSCR Loans for?

New Jersey debt service coverage ratio loans are for real estate investors that are looking to purchase income-producing properties. Loans taken out by LLCs and other corporate entities must be personally guaranteed.

For investors who already own property, a DSCR HELOAN (home equity loan) allows you to tap into your accrued equity to help qualify for a DSCR loan on a new investment property.

How to Get a New Jersey DSCR Loan

DSCR mortgage loans in New Jersey offer a very flexible alternative to traditional mortgage loans, but they still do require a few simple steps to get started:

1. Calculate what your potential DSCR would be with the new investment property. A good DSCR is usually considered to be at least 1.25. But if your DSCR is lower than 1.0, you may still qualify for a DSCR loan in NJ.
2. Work on getting your credit score up to at least 620, which is the minimum FICO required to be considered for approval. You can keep track of your credit profile and leverage tools for managing your finances and improving your score with our Griffin Gold app.
3. Anticipate a down payment of at least 20% for well-qualified borrowers. Applicants with recent credit events, low DSCR or credit score, or other high-risk factors could face higher down payment requirements.
4. Reach out to Griffin Funding and allow one of our DSCR loan specialists to provide more information on your application, walk you through how the process works, and alert you of any special documentation that may be necessary to get you approved.
5. Complete the online application to see if you’re pre-approved. Once you get pre-approved, you can begin working with a local real estate agent to purchase your new investment property.

A DSCR real estate loan for an investment property in New Jersey is a great alternative to seeking out traditional sources of funding. You may not qualify for a traditional mortgage or prefer to not use traditional funding sources for any reason. A debt service coverage ratio loan is a flexible type of non-QM loan that has less stringent borrowing standards, and makes it easier to build a real estate portfolio. We at Griffin Funding are here to help you get a DSCR loan so you can close on your purchase and move forward.

Griffin Funding is a mortgage company that offers a variety of financing products, including New Jersey DSCR loans to borrowers looking to buy investment property and grow their income. Contact us today to talk to a lending expert and discuss your options for obtaining an investment property loan. Our DSCR loan process is straightforward and easy to understand, and our lending experts are ready to answer any questions you may have. There is no limit on the number of properties you can buy using a DSCR loan, and we offer an unlimited cash out.

Call us today at Griffin Funding to get a quote and learn more about securing a debt service coverage ratio loan in New Jersey and other states. Or, if you’re ready to get started, fill out an online application to get pre-approved!