How to Improve Your Debt Service Coverage Ratio Before Applying for a DSCR Loan
Getting turned down for financing feels like a punch to the gut, especially when you know you've found the perfect investment property. The thing is, debt service coverage ratio calculations can make or break your loan application, and most investors don't realize they have more control over this number than they think. When applying for a DSCR mortgage loan , lenders want to see that magical ratio of 1.25 or higher – meaning your property's rental income covers 125% of the mortgage payments. Sounds simple enough, right? But what happens when your numbers fall short? Don't panic. There are proven strategies to boost your ratio before you even walk into that lender's office. Know Your Numbers Inside and Out First things first – you need to understand exactly what you're working with. Pull together your rental income projections, property taxes, insurance costs, and potential mortgage payments. I can't stress this enough: be realistic about rental rates. That ...