REAL ESTATE INVESTOR FINANCING

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    DSCR

    DSCR Rental Financing Guide

    How DSCR is calculated, how qualifying rent is determined, and 0.75x minimum program logic.

    What It Is

    Long-term financing for non-owner-occupied investment properties where qualification is primarily based on the property's rental income rather than the borrower's personal income. No W-2s, pay stubs, personal income verification, or tax returns are required for the standard property-income DSCR qualification.

    What Problem It Solves

    Self-employed investors, investors with complex income, and investors whose personal DTI doesn't reflect their real borrowing capacity can qualify on the property's cash flow instead. The property's rent, not the borrower's W-2, drives the approval.

    When It's Commonly Used

    Rental purchases, rate-and-term refinances, cash-out refinances, BRRRR permanent exits, and refinancing out of Fix & Flip or Bridge once a property is rent-ready and stabilized.

    Who Generally Qualifies

    First-time rental investors may qualify — experience is not universally required. For first-time investors, underwriting may place additional emphasis on credit, reserves, property cash flow, housing-payment history, property condition, and rental strategy. Owning a primary residence can strengthen a file but lack of homeownership is not an automatic disqualifier.

    Current Green Fire Program Requirements

    Core DSCR: up to 85% purchase LTV, 0.75x minimum DSCR, 660 minimum core credit, ~2–3 week typical close, 1–10 units, long + short-term rentals, purchase / rate-term / cash-out. Four structures: 30-Year Fixed, 40-Year + 10-Year IO, Flexible 30-Year, Flexible 10-Year IO. LLC/entity and foreign-national options available.

    How DSCR Is Calculated

    DSCR = qualifying rental income ÷ qualifying property payment (PITIA). PITIA can include principal, interest, property taxes, property insurance, HOA/association dues, and other applicable property-specific housing obligations. A commercial NOI formula is not the only explanation for 1–4 unit residential DSCR — the program uses gross qualifying rent against PITIA.

    How Qualifying Rent Is Determined

    Existing lease income may be used for a leased rental. For a purchase or vacant property, a market-rent analysis (Form 1007) may be used. For a short-term rental, program-supported STR projections (e.g. AirDNA-style market analysis) may be used. The lower of actual rent and applicable market rent may be used depending on program methodology — the highest projection is not automatically accepted.

    DSCR Below 1.00

    1.00x means qualifying rent approximately equals the qualifying housing obligation. The core program reaches down to 0.75x, so a property does not have to fully cover its housing payment to qualify. Below 0.75x, route to the Flexible / No-Minimum-DSCR program rather than auto-rejecting.

    What Documents to Have Ready

    Government ID, entity formation documents, purchase contract (for acquisition), current lease where applicable, rent roll for multifamily, property insurance, property tax info, current mortgage statement/payoff (for refinance), appraisal/market-rent documentation, proof of reserves, STR history or market-supported projection where applicable, title documents, and foreign-national documents where applicable.

    How the Money Moves

    On a purchase, the DSCR loan funds the acquisition up to the LTV ceiling. On a refinance, existing debt is paid at closing and remaining allowable proceeds are disbursed. Interest-only structures (40-Year IO, Flexible 10-Year IO) lower the scheduled payment during the IO period; the payment increases at conversion to amortization.

    Biggest Risks & Tradeoffs

    Interest-only lowers the payment but the balance doesn't decline during the IO period, and the payment rises at conversion. Prepayment structures (5/4/3/2/1, 3/2/1, or none) affect pricing — match the structure to the expected hold. Cash-out leverage is tighter than purchase leverage (~70–75% range, not a universal 85%).

    When to Use a Different Product

    If the property needs substantial rehab before it's rent-ready, use Fix & Flip first and DSCR as the exit. If the hold is very short and the goal is a quick sale, Bridge may fit. If the DSCR is below 0.75x, the Flexible program is the route. If the core requirement (contract, spread, seller carry, or funded end buyer) is missing, a different product — or a restructured transaction — is usually a better fit than forcing the structure.

    How Green Fire Structures It

    Green Fire reviews the qualifying rent, PITIA, credit, reserves, property, and rental strategy, then matches the deal to one of four DSCR structures based on the payment and underwriting profile that fits.

    Frequently Asked Questions

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    Explore DSCR Programs

    Educational content only. Guides describe how financing structures generally work and are not approvals, commitments, or guarantees of terms. Programs, eligibility, leverage, rates, fees, terms, timelines, and availability vary by provider, property, location, borrower qualifications, documentation, and deal structure. All financing is subject to independent provider review, underwriting, and final approval. Green Fire Strategies does not guarantee approval, terms, closing, or funding.

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