Key Terms
- Florida DSCR Loans let investors jump into the real-estate market quickly in the best Florida cities.
- DSCR loans let borrowers leverage the $96.5 billion dollar Florida tourism industry to pay for their property loans.
- Most DSCR lenders give multiple ways of repaying a DSCR loan such as; fixed-rate, adjustable rate, or interest-only.
Florida, also known as the Sunshine State, may be one of the top tourist destinations in America owing to the many Theme Parks contained within it. In fact, according to www.visitflorida.org, Florida contains 7 of the top 10 most visited Theme parks. $96.5 billion dollars was spent by tourists in 2019. Florida is also the 3rd most populous state in America with 21.9 million residents.
The real estate market in those big cities is quite healthy too, despite property taxes. The median sold house price for Q4 2021 was $365,000 according to www.floridarealtors.com. Most Florida residents own their home 67.9% of them whereas the other 32.1% rent. 8% of those rentals are open at any given time. While 8% vacancy might seem high, and indeed some of these rentals are for the long-term, many are also for short-term vacationers looking to spend time in Florida’s many beaches and resorts.
How DSCR loans work
A Debt Service Coverage Ratio loan, or DSCR loan, is a mortgage loan funded by the net operating income (NOI) of the rental property. Investors will evaluate the properties potential earnings vs. the debts operating the rental will accrue. If the property’s potential earnings are greater than the sum of debts, that property will have a DSCR ratio of 1.0 and above. A ratio above 1.0 shows that the borrower can reliably make monthly payments using rental income and may get through underwriting for a DSCR mortgage without needing to show standard W-2 proof of income.
Lenders will qualify the loan based on this number alone, which means the financial details of the borrower are not considered, including the specific borrower’s ability to repay the debt obligations. This is great for borrowers who may not qualify for a property loan based on their W2 or tax returns, since those documents are not part of the DSCR loan application process. Financial lenders like these loans because it allows more types of individuals to qualify for loans, such as foreign nationals and LLCs, and because they are much quicker to close since they do not require extensive background checks.
Top 5 most popular Florida DSCR loan lenders
If you’re in the market for a real estate investment project in Florida, consider these DSCR lenders that are available for projects in the state.
1. Griffin Funding
Griffin Funding is a national mortgage company that specializes in the types of loans that are hard to find, such as VA Home home loans, bank statement loans for the self-employed or DSCR loans for real estate investors. They are licensed to work in 21 states and are rapidly expanding.
We contacted Griffin Funding to learn more about their DSCR loans in general and here is what we found:
- No income or job history verification required
- No limits on the number of properties
- Loan amount up to $5 million
- Minimum 20% down required
- Interest-only option available
- Both long-term and short-term rentals are eligible
- No reserve required on cashout loans. Six months required on all other loans unless DSCR ratio is less than 1.
When you’re ready to connect with a loan officer, use our form to quickly match with eligible loan programs based on your specific circumstances.
2. Angel Oak
Angel Oak is a full-service private money lender that focuses on mortgage products, traditional and non-traditional (non-QM) products. They have platforms to provide both retail lending and direct lending.
We contacted Angel Oak directly to learn more about their DSCR loan program and here are some things to consider:
- Loans up to $1.5 million
- No income or employment information required
- Short-term rentals and VRBOs allowed
- Properties can be in LLC’s name
- No limit on number of properties
- 40 year fixed interest-only available
- Non-warrantable condos allowed
- Purchase, cash-out or rate-term refinance
When you’re ready to connect with a loan officer, use our form to quickly match with eligible loan programs based on your specific circumstances.
3. Fidelity Home Group
Fidelity Home Group is headquartered in Florida and offers a range of non-QM mortgage products, including low down-payment mortgages, fix-and-flip, bridge loans, self-employed mortgages and debt service coverage ratio mortgages.
We contacted Fidelity Home Group to learn more information about its DSCR loan and here is what we found:
- Minimum credit score 660
- Investment properties only
- 20% down payment required for single family homes
- 30% down payment required for non-warrantable condos and condotels
- 30% down payment required for five to eight unit properties
- 75% loan to value required for refinances
- 40-year fixed interest only options available
- Can finance up to 10 properties for one investor
- No personal income used to qualify
- Maximum loan amount is $5 million
When you’re ready to connect with a loan officer, use our form to quickly match with eligible loan programs based on your specific circumstances.
4. First Florida Financial
Founded by Eddie Hoskins in 2006, First Florida Financial works with a variety of lenders to source its loan products. They offer a wide range of financial products including jumbo loans, VA loans, FHA loans, bank statement loans and, of course, DSCR loans.
We reached out to First Florida Financial to get details about its DSCR loan and here are some key terms:
- Loan amounts up to $3 million
- 20% minimum down payment required (80% LTV max)
- Available for single-family residential housing (including condos)
- Multi-unit properties, vacant land and commercial properties are not eligible
- No debt-to-income restrictions
- 30-year fixed rates and interest only options are available
- Minimum two months reserve required
- No limits to the number of properties financed
- Seller concessions up to 2% acceptable
- 3-year waiting period for foreclosures or bankruptcy
When you’re ready to connect with a loan officer, use our form to quickly match with eligible loan programs based on your specific circumstances.
5. Tuss Financial Group
Founded by Jeff Miller and Jason Nichols, Tuss Financial Group focuses on serving business owners and has been in business for over 20 years. They specialize in stated income mortgages and have served thousands of business owners, according to their website.
We asked Tuss Financial Group for details on their DSCR loans and here is what they said:
- Loans are based on the debt service coverage ratio
- No ratio loans with 25% equity and strong FICO scores
- 30-year-fixed rate from $100,000 up to $3 million
- No tax returns of 4506 required
When you’re ready to connect with a loan officer, use our form to quickly match with eligible loan programs based on your specific circumstances.
What are the main advantages of a Florida DSCR loan?
When considering a DSCR loan, keep in mind that this loan type isn’t for everyone. Since DSCR loans are typically made for investors looking to purchase real estate, they may not make sense if you’re looking to make an investment in a liquid asset. They also often have higher interest rates than a conventional loan. Real estate can take months to sell, and in a down market may not sell at all. However, if you are looking for rental property with cash flow and have a decent-to-good credit score, DSCR loans make it easy to qualify without having to rely on W2 income.
What makes a DSCR loan for a rental property in Florida so enticing is it allows the borrower to leverage the many theme parks and other attractions to draw in your renters. The average price of a SFD in Florida is much cheaper than other populous states and taxes on real estate in Florida tend to be cheaper too. All this makes real-estate investors from out-of-state see Florida as a good investment prospect. A DSCR loan can be a great resource since you can rely on a stable population of tourists for short-term renting and a large native population for long-term renting.
For an established real-estate investor consider too that DCR loans can be used to qualify for multiple properties. This might mean several nearby units on a street, different property types in a city that will appeal to different kinds of renters, or even properties in different Florida cities to safeguard against a downward market turn.
Most DSCR loans tend to be approved in weeks instead of the months-long waits for traditional mortgages. Property investors looking to get a head-start on a DSCR loan will have many options across lenders for loan repayment; such as adjustable rate, fixed-rate, or interest only mortgage payments.
If you’re looking to explore DSCR loans in other states, check out our national overview of DSCR loans as a starting point in your search.
Joshua Holt is a licensed mortgage loan originator (NMLS #2306824) and founder of Biglaw Investor. His mortgage expertise lies in the areas of professional mortgage loans, particularly for lawyers, doctors and other high-income professionals. Prior to Biglaw Investor, Josh practiced private equity mergers & acquisition law for one of the largest law firms in the country.
