Property Type

The debt service coverage ratio (DSCR), is the ratio of net operating income to the proposed debt payments on a piece of  real estate. It is a popular benchmark used in the measurement of an income-producing property’s ability to produce enough revenue to cover the monthly mortgage payment. The higher this ratio is, the easier it is to borrow money for the property.​

There are a lot of variables that determine your monthly payment, here are some things that can make a difference...

Payment Factors

Making timely mortgage or rent payments is very important. Paying late 30 days just once can affect both the loan amount and the interest rate. Late payments on credit cards, car payments and other bills can also affect the  interest rate and loan amount.​

The loan-to-value (LTV) ratio is a calculation which expresses the amount of a first mortgage lien as a percentage of the appraised value of real property. For instance, if a borrower wants $130,000 to purchase a building worth $150,000, the LTV ratio is $130,000/$150,000 or 87%.​

One of the first questions a lender asks involves the type of property you are buying or refinancing. Common types include office buildings, self-storage, apartments, industrial and etc.. While loans may be available for many different property types the  interest rate might be lower for an apartment than for an industrial building.. It all boils down to the risk involved with writing loans on a particular property type. The less risky, the better the rate. ​

Credit and Payment History

Occupancy

Another question lenders frequently ask concerns occupancy type. Whether your loan is for the building you work in full-time, part-time or rent to others affects the interest rate. Generally, owner-occupied buildings enjoy a lower rate and higher mortgage.​

Debt Service Coverage

Loan Amount vs. Property Value

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