Most hard property money lenders are usually SISA (stated income stated assets) or NoDoc (no income documentation required).However there are loans known as DSCR which use rental income and get get rates a point or two lower than traditional hard money loans. Right now, they are at 9.5% 30 year fixed and 10% Interest only. Hard money is around 12%.A DSCR loan is a type of Non-QM (non qualified mortgage) loan for real estate investors. Lenders use a DSCR to help qualify real estate investors for a loan because it can easily determine the borrower’s ability to repay without verifying income.A DSCR loan is one of several types of home loans referred to as Non-QM loans. Non-QM loans provide potential borrowers with an alternative route to financing, which doesn’t require traditional income verification methods. A DSCR loan in particular makes it easier to show rental income that might not show up on your taxes due to deductions for legitimate business expenses.A DSCR loan enables real estate investors to get a loan because it takes into account cash flow from investment properties rather than pay stubs or W-2s, which many investors do not typically have. Lenders use DSCR to evaluate a borrower’s ability to make monthly loan payments.Deductions from properties may lower taxable income, making it hard for investors to prove their true income. Lenders use DSCR to determine whether someone can make loan repayments. Otherwise, many investors might struggle to meet the basic eligibility standards for real estate loans.Since they don’t require pay stubs or tax returns showing minimum income levels, debt service coverage ratio loans are a great alternative for investors who claim many write-offs and business deductions.How Does a DSCR Loan Work?Because real estate investors write off expenses on their properties, some may not qualify for a conventional loan. The debt service coverage ratio loan allows these individuals to qualify more easily because they don’t require proof of income via tax returns or pay stubs that investors either don’t have or that don’t represent their true income due to write-offs and business deductions.Real estate investors looking for home buying tips should consider a DSCR loan because it’s ideal for properties you intend to rent out or otherwise turn into income-generating properties. From renting to a long-term tenant or operating a short-term rental business on Airbnb, there are many situations where a DSCR loan is a good option, especially if you don’t have W-2 income.Some of the property types you can use a DSCR loan for include:Single Family Residences (SFR), including single family homes, condos, and townhomes.Multifamily properties (1-4 Units).Many real estate investors tend to use DSCR loans for rental income properties that allow them to open up new revenue streams. If you’re interested in purchasing or building a property and unsure about whether you can use a DSCR loan to do so, reach out . We can help you decide whether a DSCR loan is right for you.Benefits of DSCR Loans for real estate investors include:Potentially quicker closing timesNo income or job history verification requiredNo limit on the number of propertiesLoan amounts up to $5,000,000Unlimited cash outAs little as 20% on down paymentsCredit scores as low as 600Cashout Refinance up to 75% LTVDSCRs as low as 1.0%Interest-only loan option availableSuited for new and seasoned real estate investorsBoth long-term and short-term rentals are eligible (Airbnb, VRBO, etc.)No reserves required on cash-out loans, 6 months required on all other loans unless the DSCR ratio is less than 1DSCR LLC loans: Close in the name of your LLCReach out for any real estate, hard money questions you may have.