Debt Service Coverage Ratio (DSCR) Loans in Massachusetts


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Debt Service Coverage Ratio Loans

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Best DSCR Loans in Massachusetts

Key Terms

  • Massachusetts DSCR loans prioritize property income, benefiting investors by bypassing personal income scrutiny.
  • Investors enjoy simplified applications and diverse property financing options, though higher interest rates apply.
  • Ideal for those focusing on rental income, DSCR loans require strategic planning amidst market volatility risks.

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You’re our first priority. We want you to understand how we make money. This post may contain affiliate links. Biglaw Investor may receive a commission at no additional cost to you if you click on the links in this article. This may influence which products we write about and where and how the products appear on a page. However, it does not influence our evaluations. Our opinions are our own. In some circumstances, if you work with us, we are able to provide an incentive to work with our advertising partners that is unavailable if you work with our advertising partners directly. Our partners cannot pay us to guarantee favorable reviews of their products or services. To read more about how we make money, click here.

Easy Street Capital

(All 50 States Except NV, ND, SD)

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usually responds within 30 minutes

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Easy Street Capital

(All 50 States Except NV, ND, SD)

Easy Street Capital’s EasyRent loan program provides DSCR loans for cash-flowing investment properties. Flexible underwriting and ultra-competitive terms.

Loan Products

  • DSCR Loans: With rates starting at just 5.99% interest rates, 20% minimum down payment, no DSCR minimum, vacant properties OK.
  • Short Term Rental Loans: Leading loans for short term rentals (Airbnb); qualify with AirDNA projections and no operating history required. Rural, Vacation, and Seasonal Markets OK.
  • BRRRR Loans: Cash-out refinance DSCR Loans up to 75% with low seasoning requirements, 100% of capital invested returned in as little as 3 months
  • Multifamily Loans: 5-10 Unit properties financed on 30-year fixed rate loans with interest-only and easy qualification options. Mixed Use Loans: DSCR Loans for Mixed Use properties up to 8 units (including up to 3 commercial units)
Lender Facts
Minimum Loan

$100,000

What We Do
  • DSCR Loans Rates starting at 5.99%
  • 30-Year Fixed Rate; 10-Year Interest-Only Available
  • No DTI, No W2, No Tax Returns Needed
  • Borrow through an LLC or Entity
Not Available
  • No renovations needed
  • No properties > 10 units
  • No owner-occupied properties
  • No credit below 640

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You’re our first priority. We want you to understand how we make money. This post may contain affiliate links. Biglaw Investor may receive a commission at no additional cost to you if you click on the links in this article. This may influence which products we write about and where and how the products appear on a page. However, it does not influence our evaluations. Our opinions are our own. In some circumstances, if you work with us, we are able to provide an incentive to work with our advertising partners that is unavailable if you work with our advertising partners directly. Our partners cannot pay us to guarantee favorable reviews of their products or services. To read more about how we make money, click here.

New Silver Lending

(All 50 States Except AL, AK, ID, LA, NV, ND, OR, SD, UT, VT)

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Online

usually responds within 30 minutes

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New Silver Lending

(All 50 States Except AL, AK, ID, LA, NV, ND, OR, SD, UT, VT)

Expand your rental portfolio with New Silver’s lightning-fast DSCR loans, closing in days, not weeks. Get approved online in under 5 minutes, including an instant online term sheet.

Ready to grow your portfolio with confidence? Apply now and see how fast and easy real estate investing can be with New Silver Lending at your side.

Loan Products

  • DSCR Loans: A 30-year fixed loan tailored for rental properties—ideal for growing your rental portfolio. Up to 80% LTV. No minimum DSCR required.
  • Fix & Flip Loans: Hard money loans designed for purchasing, renovating, and reselling investment properties—perfect for executing quick fix-and-flip projects.
  • Ground Up Loans: Up to 100% construction financing for residential builders—ideal for developers ready to break ground.
Lender Facts
Minimum Loan

$150,000

What We Do
  • 30-year fixed rate—no rate surprises
  • No minimum DSCR—flexibility you need
  • Up to 80% LTV—maximize your leverage
  • Instant term sheet
  • Instant proof of funds
  • Special discounts for repeat borrowers
  • Short Term Rental Loans also available
Not Available
  • No rural properties
  • No properties > 8 units
  • No owner-occupied properties
  • No 100% financing

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Biglaw Investor Premium Lender

You’re our first priority. We want you to understand how we make money. This post may contain affiliate links. Biglaw Investor may receive a commission at no additional cost to you if you click on the links in this article. This may influence which products we write about and where and how the products appear on a page. However, it does not influence our evaluations. Our opinions are our own. In some circumstances, if you work with us, we are able to provide an incentive to work with our advertising partners that is unavailable if you work with our advertising partners directly. Our partners cannot pay us to guarantee favorable reviews of their products or services. To read more about how we make money, click here.

Ridge Street Capital

(AL, AK, AR, CO, CT, DE, FL, GA, HI, IN, IA, KS, KY, ME, MD, MA, MS, MT, NE, NM, NY, OH, OK, PA, RI, SC, TN, TX, VT, WA, WV, WI, WY)

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Online

usually responds within 30 minutes

Presented by

Ridge Street Capital

(AL, AK, AR, CO, CT, DE, FL, GA, HI, IN, IA, KS, KY, ME, MD, MA, MS, MT, NE, NM, NY, OH, OK, PA, RI, SC, TN, TX, VT, WA, WV, WI, WY)

Ridge Street’s DSCR loans allow real estate investors to purchase and refinance rental properties in 35 states, with industry-leading pricing and fast closing times for both long- and short-term rentals.

Loan Products

  • DSCR Loans For Long Term Rentals: Rates from 6.0% on cash flowing rental properties. Up to 80% LTV with a DSCR of 1.0 required.
  • DSCR Loans For Short Term Rentals: Rates from 6.75% on Airbnb and VRBO properties. Monthly rent used in DSCR calculation is based on AirDNA projected cashflow instead of 12 month track record.
  • DSCR Loans For Cash Out and Refinance: Ideal for BRRRR investors, we offer refinancing and cash-out options up to 80% LTV.
  • DSCR Loans For Multifamily Properties: 30-year loans for multifamily properties up to 25 units, with up to 80% LTV and a maximum loan amount of $2M.
Lender Facts
Minimum Loan

$50,000

What We Do
  • DSCR Loan Rates starting at 6.0%
  • Minimum DSCR of 1.0 required
  • Up to 80% LTV on purchases and refinances
  • Up to 75% LTV on cash-outs
  • Short-term rentals allowed
  • 660+ credit score required
  • 0% origination fee available
Not Available
  • No 100% financing
  • No properties > 25 units
  • No owner-occupied properties
  • No credit score below 660

From Boston’s historic streets to Cape Cod’s scenic shores, Massachusetts offers a dynamic backdrop for DSCR loans. In this diverse real estate market, these loans appeal to investors by prioritizing property income over personal finances.

The homeownership rate in Massachusetts is [fred_homeownership state=”MA”], according to the Federal Reserve. This indicates a strong market with a high level of resident investment commitment, providing a solid basis for real estate investment.

The vacancy rate in Massachusetts, reported by the US Census Bureau, stands at [fred_vacancy_rate state=”MA”]. This rate is crucial for investors utilizing DSCR loans, as it affects the potential speed of converting investments into revenue.

Massachusetts’ median listing price is $722,425, according to the St. Louis Fed. The state’s market caters to a variety of economic capabilities, making it attractive for both modest and high-end property investors.

In the subsequent sections, this guide will explore how to effectively utilize DSCR loans in Massachusetts, from selecting the right loan providers to navigating the intricacies of the local real estate market to optimize investment outcomes.

The Pros/Cons of Massachusetts DSCR loans

In Massachusetts, a state known for its robust and diverse real estate market from the vibrant cityscapes of Boston to the scenic vacation rentals of the Bay State’s coastline, Debt Service Coverage Ratio (DSCR) loans offer a distinct financing solution.

These loans cater primarily to real estate investors who wish to leverage the income-producing potential of their properties without the traditional income verification processes or personal credit score requirements associated with conventional loans. However, as is the case with any major financial decision, there are some pros and cons to weigh.

Pros:

Property income focus: Massachusetts DSCR loans prioritize the income generated from rental properties rather than the personal income of the borrower. This approach is particularly advantageous for investors who hold properties that generate stable rental cash flow but may have fluctuating personal incomes.

Streamlined application process: The requirement for minimal personal financial documentation eases the application process significantly. Investors need not submit tax returns or extensive financial records, making the process quicker and less invasive.

Flexible property types: In Massachusetts, DSCR loans are available for a variety of property types, including single-family homes, condos, and multifamily units. This flexibility allows investors to use DSCR loans for both long-term rental properties and short-term vacation rentals.

Potential for refinancing: Investors looking to refinance existing properties to secure better interest rates or to cash out equity for further investments find DSCR loans particularly beneficial due to their focus on the property’s income potential.

Loan terms and LTV ratios: Competitive loan-to-value ratios and favorable loan terms are often available through DSCR loans, depending on the lender and the property’s income-generating ability.

Cons:

Higher interest rates: To compensate for the reduced scrutiny of personal income, lenders typically charge higher interest rates on DSCR loans compared to traditional mortgage loans. This can increase the cost of borrowing significantly.

Down payment requirements: Higher down payments are generally required for DSCR loans in Massachusetts to mitigate the risk lenders take by focusing on property income rather than borrower creditworthiness.

Dependency on rental income: Since the viability of DSCR loans depends on stable rental income, any vacancies or downturns in the real estate market can pose significant risks to borrowers. This is particularly relevant in fluctuating markets or seasonal rental areas.

Limited scope: DSCR loans are specifically designed for investment properties. They cannot be used for purchasing or refinancing a primary residence, which may limit their appeal to broader categories of buyers.

Complex underwriting for novice investors: The underwriting process, while simplified in terms of income verification, can be complex regarding the assessment of the property’s cash flow and debt service coverage ratios. This might be challenging for less experienced investors.

As with any traditional loan application, verify the lender’s rules on a debt service coverage ratio loan on things like:

  • Maximum loan amount
  • How they use property value/net operating income to calculate approval
  • Minimum credit score
  • Loan terms
  • Other loan requirements and metrics reviewed

Is a Massachusetts DSCR loan right for you?

Deciding whether a DSCR loan is the right choice for your real estate investment in Massachusetts requires a detailed understanding of both your financial situation and the real estate environment. Given the state’s diverse market, these loans can provide substantial flexibility and potential for growth, but they’re not suitable for every investor or every property. Here are some key considerations:

1.   Property performance: Evaluate whether your property or the one you intend to invest in generates enough rental income to comfortably cover the loan payments and operating expenses. Properties in high-demand areas like Boston or popular vacation spots may be particularly well-suited for DSCR loans.

2.   Investment goals: Align your financing strategy with your long-term investment goals. If expanding your real estate portfolio is a priority, and you benefit from streamlined loan applications and flexibility on income verification, then a DSCR loan might be ideal.

3.   Market trends: Keep a close eye on Massachusetts real estate market trends. Understanding regional dynamics, such as the demand for rental properties in urban versus rural areas, can significantly impact the success of your investment under a DSCR loan.

4.   Financial readiness: Consider your financial readiness to handle the higher costs associated with DSCR loans, such as increased interest rates and larger down payments. These factors can affect the overall profitability of your investment.

5.   Risk management: Assess your ability to manage the risks associated with dependency on property income, especially in volatile or seasonal rental markets. Planning for potential vacancies and ensuring a buffer to cover unexpected downturns are crucial steps.

In summary, a Massachusetts DSCR loan offers a valuable opportunity for real estate investors to finance properties based on rental income potential rather than personal financial history. However, it requires careful consideration of the property’s performance, market conditions, and your financial stability to ensure it aligns with your investment objectives and risk tolerance.

Examples of investors who take out a DSCR loan in Massachusetts

Massachusetts, with its blend of historic charm and modern innovation, offers a wealth of real estate opportunities. DSCR loans are particularly advantageous for investors who focus on the income potential of their properties. Here are two examples of investors using DSCR loans in Massachusetts:

Example of a REIT: Meet Capital Trust, a REIT specializing in residential properties in Boston. By utilizing a DSCR loan, Capital Trust can finance the acquisition of a new apartment complex in a growing neighborhood based on the rental income it generates. This strategy allows the REIT to expand its portfolio without overextending its existing capital, capitalizing on Boston’s strong demand for rental housing.

Example of a fix-and-flip investor: Imagine Laura, a fix-and-flip investor in Worcester. She is planning to purchase an older property in a historic district that requires significant renovation. With a DSCR loan, Laura can qualify based on the income potential of the renovated property, enabling her to finance both the purchase and renovation costs. This approach helps her to maximize returns in Worcester’s competitive real estate market.

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.

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