Key Takeaways:
➡️ DSCR loans from HomeAbroad Loans allow real estate investors to qualify based on rental income, offering more flexibility than conventional loans, especially for self-employed borrowers and foreign nationals.
➡️ Investors do not need to rely on personal income or tax returns to qualify; instead, the property's cash flow is the key factor for securing financing.
➡️ Cities like Miami, Orlando, and Tampa provide high rental yields and opportunities for short-term and long-term rental income, making them ideal for DSCR loan investments.
Florida’s rental market is booming, offering substantial opportunities for real estate investors. In 2023 alone, foreign buyers accounted for 18% of total sales volume, contributing $5.1 billion to the market, with 67% of transactions made by non-US residents. [Source: Miami Realtors]
This robust influx of capital presents lucrative opportunities for real estate investors.
Whether you’re targeting short-term rentals or long-term properties, understanding the right loan programs can help maximize your investment potential.
With HomeAbroad Loans’ DSCR loan program, domestic investors can capitalize on these trends by qualifying based on property cash flow. Foreign nationals can also apply for DSCR loans in Florida without a US credit score, making it an attractive option for global investors looking to tap into this thriving market.
Table of Contents
Understanding DSCR Loans and How It Works
A DSCR loan from HomeAbroad Loans enables real estate investors to qualify based on their rental property’s income, rather than relying on personal income or tax returns.
Let’s further understand this with an example.
Meet Mark Stevens: A Self-Employed Investor
Mark Stevens, a US-based real estate investor and entrepreneur, wanted to expand his rental property portfolio by investing in a short-term rental in Orlando, Florida. However, traditional loan options were challenging for him because of his fluctuating personal income as a self-employed individual.
The Solution: HomeAbroad Loans’ DSCR Loan
Mark opted for a DSCR mortgage from HomeAbroad Loans, which allowed him to qualify based on the property’s rental income instead of his personal financials. Here’s how the DSCR worked for Mark:
- Gross Rental Income: $60,000 annually
- PITIA*: $50,000 annually
- DSCR Calculation: Gross Rental Income ÷ PITIA
- DSCR: 60,000 ÷ 50,000 = 1.2
Since Mark’s DSCR was 1.2 (indicating the property earned 20% more income than its debt payments), he was eligible for the loan.
*PITIA is Principal of Mortgage, Interest of Mortgage, Taxes, Insurance, and Association Fees (HOA).
Why This Worked for Mark:
- No Need for Personal Income or Tax Returns: Unlike traditional loans, Mark’s rental property was the key factor in qualifying for financing.
- Flexible Loan Terms: HomeAbroad Loans provided flexible loan terms to improve cash flow in the first few years of ownership.
- Investment Growth: With a DSCR loan, Mark successfully financed the property and grew his portfolio without the usual income constraints.
This case shows how HomeAbroad Loans’s DSCR loan programs empower investors like Mark to expand their real estate investments based on property income.
You can get more information on DSCR Loans and how it works in HomeAbroad Loans’s DSCR Loan Guide.
DSCR Loan Requirements
Qualifying for a DSCR Loan for LTR and STR properties primarily focuses on the income generated by the property itself. The key requirements for HomeAbroad Loans’s DSCR loan program include:
With these requirements in mind, two key factors are crucial to underwriting your DSCR loan.
Generally, at HomeAbroad Loans, we focus on two main factors. For US citizens, a minimum credit score is considered, but assuming it meets the criteria, the focus shifts to these two factors. For foreign investors, we can proceed without a US credit score.
1. Assets for Closing:
You need sufficient funds to cover the down payment (typically 25%) and closing costs, which usually range from 3% to 4% of the loan amount. We require a two-month history showing these assets in your account.
2. Property Income:
We also need to verify the property’s rental income, either through an appraisal (1007 Rent Schedule) or through a history of short-term rental income.
If you can show the required assets for the down payment and closing costs, and we have rental income verification, securing the loan becomes a straightforward process.
Now that we understand the requirements and eligibility factors for DSCR Loans, let us look at how we can calculate our DSCR ratio.
How to Calculate Your DSCR Ratio for Florida DSCR Loans
The Debt Service Coverage Ratio (DSCR) is a crucial metric that lenders use to assess a borrower’s ability to cover mortgage payments with their rental income. For real estate investors, a higher DSCR indicates strong cash flow, which improves your chances of securing better loan terms.
Here’s the formula to calculate DSCR ratio:
To simplify the process, HomeAbroad Loans offers an easy-to-use DSCR Calculator where you can instantly calculate your DSCR ratio without any mathematical hassle. Simply enter the key figures to see where you stand.
At HomeAbroad Loans, we specialize in providing DSCR loans tailored to real estate investors. While many lenders require a minimum DSCR of 1 and above, we offer flexibility with loans available for DSCR ratios as low as 0.75.
In some cases, we offer “No Ratio DSCR loans” for properties with a DSCR below 0.75, allowing you to secure financing even if your rental income doesn’t fully cover debt obligations. However, this option requires a larger down payment and comes with higher interest rates to mitigate the additional risk.
By using HomeAbroad Loans’s DSCR loan options, you can maximize your real estate investment potential in Florida. Our flexible loan programs ensure that you get the financing you need, regardless of your DSCR ratio.
How to Apply for a Florida DSCR Loan with HomeAbroad
Applying for a Florida DSCR loan with HomeAbroad is a straightforward process designed to cater to real estate investors. Whether you’re looking to finance a multi-family unit, single-family home, or a short-term rental in Florida, HomeAbroad ensures you get the most suitable loan options with minimal hassle.
You can check out our DSCR Loan Guide to understand the application process.
You can also check our video to have a visual understanding of the DSCR Loan process:
Top Places in Florida to Invest Using DSCR Loans
Florida remains a prime destination for short-term rental (STR) investments, with cities like Miami, Orlando, and Tampa offering exceptional returns for real estate investors. With DSCR loans from HomeAbroad Loans, investors can tap into these high-demand markets and benefit from attractive rental yields.
| City | Average Monthly Revenue – STR | Rental Yield % – STR | Vacancy Rate % |
|---|---|---|---|
| Miami | $5007.42 | 10.47% | 46% |
| Orlando | $4803.15 | 13.83% | 45% |
| Tampa | $3183.96 | 9.60% | 48% |
1. Miami
Miami is a hotspot for short-term rental properties due to its status as a global destination for tourism and business. The city promises strong cash flow potential with an average monthly revenue of $5,007.42 for STRs and a rental yield of 10.47%.
Despite a relatively high vacancy rate of 46%, Miami’s diverse economy and consistent influx of tourists and international residents keep demand high. It is an ideal location for investment properties such as condos and single-family homes.
Miami’s favorable tax policies and lack of state income tax also make it an attractive destination for real estate investors.
2. Orlando
Known for its thriving tourism industry, Orlando offers one of the highest short-term rental yields in Florida, at 13.83%. With average monthly revenue from STRs reaching $4,803.15 and a relatively low vacancy rate of 45%, Orlando is a lucrative market for investors looking to capitalize on short-term rental income.
Home values in Orlando have seen a 5-year appreciation of 60%, further enhancing its appeal for real estate investment. Investors can leverage DSCR loans to finance multifamily and single-family properties, benefiting from Orlando’s continuous population growth and booming tourism sector.
3. Tampa
Tampa is an emerging market with strong growth potential for both long-term and short-term rental investments. With a rental yield of 9.60% and average monthly revenue of $3,183.96 for STRs, Tampa’s rental market offers stability for investors.
The city’s 75% 5-year appreciation in housing prices further supports its attractiveness as an investment destination. Tampa’s strategic location, growing population, and demand for rental properties make it ideal for investors seeking multifamily and commercial properties.
Explore more places with our list of best places to buy rental property in Florida.
Ready to maximize your returns in Florida’s hottest real estate markets?
HomeAbroad Loans offers tailored DSCR loan programs that allow you to qualify based on rental income, helping you seize investment opportunities in cities like Miami, Orlando, and Tampa. Contact us today to explore how our flexible loan options can help you grow your portfolio and boost your rental income potential!
Start your investment journey now.
Maximize Your Investment Potential in Florida with HomeAbroad Loans
Investing in Florida’s real estate market with a DSCR loan offers a range of benefits for property investors. By focusing on the rental income and cash flow of the property rather than personal income or tax returns, these loans provide unparalleled flexibility.
Whether you’re looking to invest in short-term rentals, multifamily units, or single-family homes, DSCR loans from HomeAbroad Loans make it easier to qualify for financing.
With HomeAbroad Loans’ tailored DSCR programs, borrowers can access competitive loan terms, low down payment requirements, and flexible LTV ratios. Our solutions are designed to optimize your real estate portfolio, allowing you to grow your investments and maximize income potential.
Whether you’re a seasoned investor or just starting out, DSCR loans help unlock new opportunities in Florida’s booming rental market.
Frequently Asked Questions
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What are the interest rates for DSCR loans?
DSCR loan interest rates vary depending on market conditions, borrower profiles, and property types, but they are typically higher than conventional loan rates. However, HomeAbroad Loans offers competitive rates that allow investors to leverage property cash flow for better returns.
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Can self-employed borrowers apply for a DSCR loan?
Yes, DSCR loans are ideal for self-employed borrowers who may not have consistent personal income or tax returns. The loan qualification is based on the property’s income rather than the borrower’s personal financial history.
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Is cash-out refinancing available for DSCR loans?
Yes, HomeAbroad Loans offers cash-out refinancing options for DSCR loans, allowing investors to extract equity from their properties for further investments or renovations.
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What is the minimum DSCR required to qualify?
HomeAbroad Loans typically require a minimum DSCR of 0.75, but we also offer “No Ratio DSCR” loan options for certain cases where the property’s income is below this ratio.
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Can foreign nationals apply for DSCR loans in Florida?
Yes, foreign nationals can apply for DSCR loans through HomeAbroad Loans without needing a US credit score, making it a flexible financing option for international investors.
At HomeAbroad, we ensure the reliability of our content by relying on primary sources such as government data, industry reports, firsthand accounts from our network of experts, and interviews with specialists. We also incorporate original research from respected publishers when relevant. Discover more about our commitment to delivering precise and impartial information in our editorial policy.
Zillow: Rental and Housing Data
AirDNA: Short-term Rental Data
Miami Realtors: International Homebuyer Transactions in Florida
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