Question 1

What DSCR is required for a loan?

Accepted Answer

The borrower has adequate cash flow to meet their loan obligations if the DSCR is significantly higher than 1, such as 1.6. Although every loan is different and has a different minimum DSCR, most lenders prefer to see a minimum DSCR of 1.2 to 1.4, with a ratio of 2.0 or higher being the best.

Question 2

What does your DSCR have to be to qualify?

Accepted Answer

In order to be eligible for a DSCR loan on a short-term rental property, you must normally fulfil specific requirements, like having a minimum credit score of 700. A DSCR of at least 1.00. For borrowers who have experienced STRs for at least a year, a minimum down payment of 25% is required.

Question 3

What is the minimum DSCR for a commercial loan?

Accepted Answer

In general, most lenders prefer a DCR/DSCR of at least 1.20x. However, certain types of loans will go below this.

Question 4

What is the formula for DSR?

Accepted Answer

Net income is your income after certain deductions, such as income tax and employee provident fund (EPF) and credit card repayments. Debt is the total amount of all your current financial commitments.

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