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Grandview Lending Inc.

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DSCR Loans in Indiana

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DSCR Loans in Indianapolis IN

Many investors face a quandary when they are buying real estate. If they already owned the rental property they want to buy, it would generate enough income to easily afford it. But they do not own it yet, so they have less income to report—making it harder to qualify.

DSCR loans were created to solve this problem. They allow you to use the projected income from the rental property when applying for the loan.

What is a DSCR Loan?

DSCR stands for “debt service coverage ratio.” A DSCR loan is a type of non-QM loan that considers your anticipated rental revenue when evaluating your mortgage application.

The DSCR is calculated as:

DSCR = Net Operating Income ÷ Debt Service

Debt service includes:

  • Principal repayment
  • Lease payments
  • Interest payments

Who Uses DSCR Loans in Indiana?

Real estate investors who plan to rent out their properties use DSCR loans to qualify based on the income potential of the property, not just their personal income.

If an investor already has strong income and a low debt-to-income (DTI) ratio, they might not need a DSCR loan. But for those who need the projected rent factored in to qualify, DSCR loans can be the key to approval.

How DSCR Loans Work

  1. Apply for the DSCR loan. The lender will evaluate the estimated rental income for the property you want to purchase.
  2. DSCR calculation. The lender determines the DSCR ratio based on your projected net income and debt payments.
    • Many lenders require a minimum DSCR of 1.0, which means the rental income breaks even with your loan payments.
    • Some programs allow DSCR below 1.0, though this may come with a higher down payment requirement. Even if you’re not breaking even, you may still be able to qualify.
    • A DSCR of 1.25 or higher is considered strong, indicating the property’s income exceeds the debt obligation by 25%.
  3. Finalize your purchase. Once approved and the offer is accepted, you can close on the property using your DSCR loan.

Benefits of Indiana DSCR Loans

  • Easier qualification thanks to inclusion of projected rental income
  • Possible lower interest rates due to stronger loan profile
  • No need to provide personal income or employment documentation
  • Fast, streamlined approval process with minimal paperwork
  • No limit to how many properties you can purchase—great for growing your portfolio

Apply for a DSCR Loan in Indiana

Grandview Lending can help you invest in real estate in Indianapolis or anywhere in Indiana. Call us today at (317) 255-0062 to schedule your DSCR loan consultation. We’ll calculate your DSCR and help you find the best loan program—even if your ratio is below 1.0.

The Do’s and Don’ts of Buying Vacant Land

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Buy a Home in Indianapolis IN

Indiana is a state with classic Midwest charm. With its wide open spaces, many of them suitable for farming, it is a great place to shop for land for residential or commercial use.

When buying land, it helps to go into the process with your eyes open, aware of the do’s and don’ts. Below, we go over these with you so that you are prepared and make smart choices when investing in IN real estate.

When Purchasing Land, Do:

  • Have a clear budget, and break it down into categories for different types of expenses (see below).
  • Be aware that the cost of the land may not be your total costs. Many purchases will end up leading to additional costs to install utilities, add an access road, etc. Make sure that what looks like a great deal at a glance really is one before you jump on it. Account not just for the money you may need to put into making the land habitable, but also the time and energy.
  • Use a real estate agent to speed up the process, but make sure they are reputable and knowledgeable about the local area.
  • Check if there are any local government incentives available to you.
  • Order surveys and environmental tests.
  • Consider a blanket loan if you are purchasing multiple parcels of land. If you intend to sell off parcels one-by-one later, the part of your mortgage associated with each parcel will be released with each respective sale.

When Purchasing Land, Do Not:

  • Describe your detailed plans for the land to the people living nearby. Sometimes they may not be thrilled with what you want to do, and might try to put up roadblocks.
  • Assume that it will be possible for you to rezone land. While this can sometimes be done, it is a challenging process, and in many cases, the building department will simply say no. If the land is not zoned for what you want, it is better to look for different land to buy.
  • Buy land without considering how you will overcome challenges related to it. For example, will it be hard to get construction equipment to the site? Does the building site have a steep incline? How do you plan to tackle these issues, and how expensive will it be?
  • Forget about what you will have to do to maintain the land. Make sure that you are willing to commit to the work required. If you will be buying land in a different state from where you live, consider your willingness to travel when needed to manage the land.

Buy Land in Indiana with a Competitive Loan

Indiana offers many opportunities to buy vacant land with commercial and residential potential. If you are ready to purchase vacant land, please contact us for your consultation. Grandview Lending offers competitive blanket loans. To get started now, please give us a call at (317) 255-0062.

What Tax Documents Do You Need to Apply for a Mortgage?

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When you apply for a mortgage, some of the factors that are assessed to determine whether you qualify for a home loan include your income and employment status. To help verify these, lenders typically require borrowers to submit certain tax forms when they apply.

Here are the tax forms Grandview Lending asks you to submit with your loan application:

Mortgage Broker in Indianapolis IN
  • W-2: If you receive $600 or more from an employer during the course of the year, that employer is required to file a W-2 tax form for you. On the form, your income is recorded, along with all withholdings. Note that the income can include wages, tips, as well as other forms of compensation.
  • 1040: This is the standard federal tax return form for individual taxpayers. On Form 1040, you report your income as well as any deductions you are claiming. The form allows you to calculate whether you owe any remaining tax at the end of the year, or if the IRS owes you a refund.

What If You Don’t Have These Tax Documents?

If you happen to be self-employed, then you still should have filed a 1040 at the end of the year. That is the tax return form for all individuals, whether they are employees or self-employed.

If you are retired, however, and not receiving any income in addition to your social security benefits, you usually do not have to file a return. So, you may not have a 1040.

Also, if you are self-employed, you do not receive a W-2. You may or may not receive similar forms from clients or payment processors called 1099s. As not every client likely provides them, they often do not illustrate your full income. That leaves you having to fill in the blanks.

In that situation, what do you do? You an apply for a different type of mortgage called a self-employed home loan.

Another name for this type of loan is “bank statement loan.” The reason it is called a bank statement loan is because instead of verifying your income using tax documents, you provide bank statements.

With a regular loan application that includes tax documents, you only need to provide about 2 months of bank statements.

But with a bank statement loan, you need to provide 12-24 months of bank statements in order to provide a detailed look at your income over a sufficient time span. Not every lender offers bank statement loans, but Grandview Lending does.

Buy a Home in Indiana Now

Grandview Lending is based in Indianapolis, and can help you buy a home or refinance in Indianapolis or anywhere in Indiana. During the mortgage process, we can walk you in detail through all of the paperwork and documents you need to submit with your loan application, regardless of whether you are employed or self-employed. To get started, please give us a call at (317) 255-0062 to schedule your consultation.