Unlock the Power of DSCR Loans for Real Estate Investors

What is Debt Service Credit Ratio (DSCR)?

DSCR is a financial metric that measures a company's ability to meet its debt obligations with its current income. (Calculation: DSCR = Net Operating Income (NOI)/Total Debt Service).

What is a DSCR Loan?

A type of financing used by real estate investors to purchase income-producing properties. Instead of relying on the borrower's personal income, DSCR loans primarily assess the property's ability to generate enough rental income to cover the mortgage payments and other expenses. The key factor is the Debt Service Coverage Ratio, which is calculated by dividing the property's net operating income (rental income minus operating expenses) by the total debt service (mortgage payments).

Are DSCR Loans subject to TRID requirements?

DSCR loans are not typically regulated by the Real Estate Settlement Procedures Act (RESPA) nor subject to the TILA-RESPA Integrated Disclosure (TRID) requirements, which means we can share referral fees with you. However, Upperhand Solutions will review each loan application on an individual basis to determine if there is a nuanced case where TRID would apply.

Are there specific state guidelines I should be aware of when referring clients for DSCR Loans?

Yes, although DSCR Loans are not subject to TRID, state-specific regulations may still apply. Upperhand Solutions always adheres to all state guidelines and we encourage our partners to do the same. If you’re unsure about the rules in your state, don’t hesitate to reach out to us. Our team is equipped to provide the necessary guidance to ensure compliance.

How does Upperhand Solutions’ referral process work with DSCR loans?

Partnering with Upperhand Solutions is straightforward. Once you introduce a client interested in a DSCR Loan, our team takes over the loan application and processing. Upon successful closing of the loan, a referral fee is paid to you. We ensure that all state rules and requirements are followed meticulously, so you can focus on what you do best—helping your clients find the perfect properties. Referral fees are only paid for DSCR loans at this time. The Upperhand Solutions team is working to establish similar referral programs for other non-QM lending options.

Does Upperhand Solutions do other types of loans?

Yes, Upperhand Solutions specializes in non-QM, or non-qualified mortgages, loans. Other examples of non-QM loans are Bank Statement Loans, Asset-Based Loans, Foreign National Loans, and ITIN Loans. If you have other loan needs specific to residential, or traditional mortgage loans, we are happy to refer you to our network of qualified loan officers.

What are some of the benefits of non-QM loans?

Non-QM loans are types of mortgages that do not meet the strict guidelines set by the Consumer Financial Protection Bureau (CFPB) for “qualified mortgages”. Non-QM mortgages may be ideal for borrowers who don't fit traditional lending standards, like self-employed individuals or those with unique income sources. They offer more flexibility but usually come with higher interest rates, larger down payments, and stricter underwriting.