Self-Employed Borrower DSCR loans are specialized mortgages designed for entrepreneurs, freelancers, and small business owners who want to invest in real estate. These loans offer a flexible alternative to conventional financing, allowing you to qualify based on your business income and the property's potential, rather than just your personal tax returns.
Instead of solely relying on traditional income documentation, lenders assess your qualification based on a combination of factors:
Business Income: Lenders may consider your business's profit and loss statements, bank statements, or other financial documents to verify your income.
Bank statements: Analyzing your business bank deposits over a period of time to determine your cash flow.
Profit and loss statements: Reviewing your business's financial performance to assess its profitability.
Debt Service Coverage Ratio (DSCR): This crucial metric compares the property's rental income to its mortgage payments, ensuring it can comfortably cover the debt.
Credit History: While DSCR loans are more flexible, a good credit score still demonstrates responsibility and can lead to better terms.
Small Business Owners:
Those who reinvest profits back into their businesses, resulting in lower personal income on tax returns.
Freelancers and Contractors:
Individuals with fluctuating income or those who receive 1099s instead of W-2s.
Real Estate Investors:
Entrepreneurs who want to expand their real estate portfolios and leverage property income.
Those with fluctuating income:
Individuals whose income may vary from year to year, making it challenging to meet traditional lending standards.
