{"id":8684,"date":"2019-11-16T18:37:27","date_gmt":"2019-11-16T23:37:27","guid":{"rendered":"http:\/\/teammovemortgage.com\/?p=8684"},"modified":"2020-12-29T02:11:50","modified_gmt":"2020-12-29T02:11:50","slug":"debt-service-coverage-ratio","status":"publish","type":"post","link":"https:\/\/teammovemortgage.com\/blog\/debt-service-coverage-ratio\/","title":{"rendered":"Rental Property Purchase Using Only Rental Income to Qualify"},"content":{"rendered":"\r\n

Owning real estate is one of the best and most proven ways to build wealth<\/a><\/strong>. Now, buying rental property has become much easier. Whether buying investment property for the first time or a seasoned real estate investor, there is a program which practically qualifies the buyer solely on the rental property. Imagine being able to purchase investment property only using the debt service coverage ratio. Therefore, the main way to qualify is using the market rent for the new property. So, we explain how simple it is to purchase or even refinance rental property.<\/p>\r\n\r\n\r\n\r\n

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Buying a rental property has never been easier<\/figcaption>\r\n<\/figure>\r\n\r\n\r\n\r\n

What is Debt Service Coverage Ratio?<\/h2>\r\n\r\n\r\n\r\n

Most mortgage loans require tax returns, W2’s, and pay stubs in order to qualify to purchase or refinance real estate. Although when it comes to purchasing rental property, it is possible to qualify using a debt service coverage ratio. No other income requirement! So, the only income calculation required is the rental income compared to the new mortgage payment on the rental. Thus, no tax returns required and the borrowers do not even have to sign a 4506 for requesting transcripts from the IRS. In the end, it is about as close as one can come to a no income verification home loan.<\/p>\r\n\r\n\r\n\r\n

Buying a Second Home with Low Down Payment<\/a><\/div>\r\n\r\n\r\n\r\n

Debt Service Coverage Ratio Calculation<\/h3>\r\n\r\n\r\n\r\n

Buying a rental, the income calculation is based solely on the subject property’s cash flow. As long as the total housing payment for the rental property does not exceed the market rent, the income is sufficient! The total housing payment must include principal, interest, property taxes, insurance, and HOA dues (if applicable). PITIA for short. Then, the monthly amount of all of these must not exceed the market rent per the appraisal<\/a><\/strong>. If the PITIA exceeds the market rent by $1, the payment must be lowered in some way for it to work. This could mean lowering the loan amount or possibly a lower insurance quote.<\/p>\r\n\r\n\r\n\r\n

Buying a Rental Condo is Easier<\/a><\/div>\r\n\r\n\r\n\r\n

Other Debt Service Coverage Requirements<\/h3>\r\n\r\n\r\n\r\n

In order to buy investment property using this program, there are some additional requirements. Although, the guidelines are very lenient.<\/p>\r\n\r\n\r\n\r\n

Credit Requirements<\/h3>\r\n\r\n\r\n\r\n

While this program offers both fixed and adjustable interest rates, the credit scores are very flexible. Here are the credit score requirements.<\/p>\r\n\r\n\r\n\r\n