Finance
In Virginia, a 'DSCR loan' for investors means the qualification is based primarily on:
AThe borrower's personal income
BThe rental property's cash flow relative to the mortgage payment✓ Correct
CThe borrower's net worth
DThe property's assessed value
Explanation
Debt Service Coverage Ratio (DSCR) loans qualify borrowers based on the rental property's projected income compared to the mortgage payment, rather than the investor's personal income. This is popular for investment property financing.
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Key Terms to Know
Loan-to-Value Ratio (LTV)
The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Math Concepts
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