The Incredible Lender
Gold DSCR Loan
This Investor Only Loan Program is not for Owner Occupied buyers
What Is the Debt-Service Coverage Ratio (DSCR)?
A DSCR Loan is only for investors (not for owner occupied properties). The debt-service coverage ratio (DSCR) measures a firm's available cash flow to pay current debt obligations. The DSCR shows investors and lenders whether a company has enough income to pay its debts. The ratio is calculated by dividing net operating income by debt service, including principal and interest.
Incredible Lender Gold DSCR: Pre Payment-Penalty Options (for a lower interest rate)
In many cases, it is possible to get a lower interest rate if the investor chooses to have a pre-payment penalty added to the loan agreement. The investor will lower the interest rate knowing that they will have a guaranteed rate of return on the money they lend for a set number of years.
The Incredible Lender Gold DSCR has pre-payment penalty choices of no prepayment penalty and up to a 5 year pre-payment penalty (0, 1, 2, 3, 4, & 5)
Incredible Lender Gold DSCR: Limitations on Pre-Payment Penalty Options
Some states do not allow a pre-payment penalty like KS, MI, MN, NM, OH & RI. Other states may limit the length of a pre-payment penalty (2 years in MS, 3 years in DC, ID, IA, LA & MD).
Incredble Lender Gold DSCR: Terms of the pre-payment penalty
The prepayment charge will be equal to 6 months of interest on the amount of the prepayment that exceeds 20% of the original principal balance. The charge applies to loans that pay off due to sale or refinance, or reducing the origional loan amount by more than 20% in a 12-month time period.
5 Year Pre-Payment Penalty Option
Example:
$1,000,000 Loan @ 8% Interest Rate (6 months of interest = $40,000)
Pre-payment penalty was never triggered because the borrower never paid more the 20% of the loan in a 12 month period.
Years of Prepayment Penalty | Loan Principal Payments (No more than 20% of loan amount) |
Loan Balance |
Year 1 | $200,000 | $800,000 |
Year 2 | $200,000 | $600,000 |
Year 3 | $200,000 | $400,000 |
Year 4 | $200,000 | $200,000 |
Year 5 | $200,000 | $0 |
Years 6 to 30 | (5 year pre-payment penalty over) | Loan Paid Off |
Updated 2024-2-2 (Incredible Lender Gold DSCR Guidelines)