If you’re looking for ways to diversify your portfolio and to generate more income from your savings, Debt Service Coverage Ratio mortgages—DSCR -may be just the tool. These mortgages allow customers to income qualify based solely on the rental income from the home—no employment or tax returns required.
People looking to generate tax savings and income have long known that rental homes may present the best opportunity. But what if you’ve been turned down due to income, or have such convoluted tax situations that the thought of qualifying for a mortgage sounds like nails on a chalkboard? You’re in luck! DSCR mortgages make sense of the world by ignoring employment and tax returns—if the rent covers the total housing payment, your employment and tax returns are irrelevant.
No this isn’t the wild west. No this isn’t subprime. And no, just because you can fog a mirror with breath doesn’t mean you’ll be approved. These mortgages are only for rental homes and are government regulated 30-year fixed loans. There are no balloon payments or negative amortization, but they do typically have prepayment penalties ranging from 1-5 years—you can choose the length of time. Savings and credit requirements also still apply, along with other variables to qualify. However, the old adage of “the property pays for itself” is the core philosophy for these mortgages.
So, if you’re looking to put your money to work in more places than just stocks or savings accounts, DSCR mortgages could be a great option to help diversify your investment portfolio.