A DSCR (debt service coverage ratio) loan is a business-purpose mortgage on a rental property, based on the property’s own rent instead of your personal income.
Run the numbers first: DSCR calculator
We make DSCR loans on rental properties in North Carolina, as a direct mortgage lender based in New Jersey. For business purposes only.
See what the rent supports, then talk the property through.
Fidelity Residential · NMLS #103098 · Equal Housing Lender
North Carolina’s median gross rent, $1,228 a month, is below the national median of $1,413, and its median home value, $288,900, is also below the national $332,700. About 33.4 percent of North Carolina’s occupied homes are rented, below the national 34.8 percent, and its median real estate taxes paid, $1,896 a year, are below the national median of $3,119.
North Carolina’s median real estate taxes paid are below the national median, but every property has its own bill and its own insurance cost. Ask for the property’s current tax bill and an insurance quote before you sign a contract, and enter both in the calculator.
In our state-by-state studies, a year of North Carolina’s median rent equals about 5.10 dollars for every 100 dollars of its median home value, number 19 of the 41 places we cover (40 states and the District of Columbia), counting from the highest (national: 5.10), and about 7.1 of every 100 rental homes stood empty and for rent, number 8, counting from the highest (national: 5.5). See rent compared with home values, state by state and rental vacancy rates, state by state.
For a DSCR loan, what matters is how the rent of the property you have in mind compares with its own full monthly payment: principal, interest, property taxes, insurance and any association dues. State medians are a starting point, not a substitute for the lease, the appraiser’s market rent, the tax bill and the insurance quote on that property.
Source: U.S. Census Bureau, American Community Survey 5-year estimates, 2020-2024 (tables B25064, B25077, B25003, B25103 and B01003). Estimates, not counts.
Fidelity Residential is a direct mortgage lender based in New Jersey. We make DSCR loans on rental properties in North Carolina: business-purpose loans for landlords and investors, based on the property’s rent instead of your personal income.
You work with us by phone, email and online. A loan officer can look at the lease, the tax bill, the insurance quote and the costs of the property you have in mind and tell you early how the rent compares with the payment, before you spend money on an appraisal.
DSCR stands for debt service coverage ratio. The lender compares the property’s monthly rent with its full monthly payment: principal, interest, property taxes, insurance and any association dues. That comparison, the ratio, takes the place of your personal income.
No tax returns, pay stubs or debt-to-income ratio are used. Your credit, your record of housing payments, the money for the down payment and reserves, and the appraisal are still checked. The rent used is generally the lower of the lease and the appraiser’s market rent.
It is a business-purpose loan for landlords and investors buying or refinancing a property nobody on the loan lives in. You can hold title in your own name or in a company, such as a limited liability company, with the owners signing as personal guarantors.
A worked example, in words. Say you are buying a single-family house in Raleigh to rent out.
The DSCR calculator does this arithmetic with your own figures and shows the loan size the rent would support. It is an estimate, not a decision.
Two things to get right early on a North Carolina rental.
Property taxes and insurance are part of the monthly payment the rent has to cover, together with principal, interest and any association dues. When you run the DSCR calculator for a North Carolina rental, enter the property’s own tax bill and a real insurance quote, with flood insurance if the property needs it.
A house let to a tenant on a lease is a DSCR loan like any other rental. A house let by the night or week through a booking platform is financed through our short-term rental loans, where local rules allow the property to be let short-term, so check the city’s or county’s rules before you buy. Both are for business purposes only.
Each program sets its own rules for the property. These are the main kinds we finance.
A single home let to a tenant on a lease, or one you are buying to rent out. The rent is taken from the lease and the appraiser’s rent schedule.
The rent of every unit counts toward the ratio. Nobody on the loan may live in any of the units.
Small apartment buildings, and buildings with homes and a shop or office, based on the building’s rent. The appraisal and the reserves ask for more, and the programs want an experienced landlord.
Loans for five to ten units and mixed useA house, condo or two to four units let through a booking platform. Programs count this income differently from a lease, and the property must be allowed to be let short-term where local rules require it.
Short-term rental loansBuy a rental, refinance to change the loan, or take cash out of a rental you own.
How a cash-out refinance worksIf you bought and renovated with a fix and flip loan and decide to keep the property, a DSCR loan can replace the short-term loan once the property is rented.
Fix and flip loansNo tax returns or pay stubs. Most investors can start with these.
The steps. Tell us about the property; we check credit and you send statements; the appraiser values the property and reports market rent, and we work out the ratio; you sign a statement that the loan is for business purposes and that nobody on the loan will live in the property; then underwriting, title, insurance and closing. Our DSCR loan guide has the detail, and the DSCR calculator works out the ratio from the rent and costs you enter.
Not sure a DSCR loan is the right fit? A conventional investment loan is underwritten on your own income; a DSCR loan on the property’s rent. See DSCR or conventional investment loan, or test a deal first with the rental deal analyzer.
Yes. We make DSCR loans on rental properties in North Carolina, for business purposes only. Fidelity Residential is a dba of PFN Lending Group, Inc. (NMLS #103098), a direct mortgage lender based in New Jersey. You can look the company up on NMLS Consumer Access (opens in a new tab).
By phone, email and online. Tell us about the property through the quote form or call 732-686-9999. The appraiser inspects the property and reports its market rent, and a loan officer works through the rest of the file with you.
Divide the monthly qualifying rent by the full monthly payment: principal, interest, property taxes, insurance and any association dues. The qualifying rent is generally the lower of the lease and the appraiser’s market rent. On a North Carolina rental, use the property’s own tax bill and insurance quote, and add flood insurance if the property needs it. The DSCR calculator does the arithmetic for you.
Yes, as an investment property. A home let by the night or week is financed through a short-term rental loan, where local rules allow short-term letting; check the local rules and any association’s rules before you buy. Nobody on the loan may use the property as a home, even part of the year.
Yes. A DSCR loan can buy a rental, refinance to change the loan, or take cash out of a rental you own. The rent, your credit, your assets and the appraisal are checked the same way, and on a cash-out the lender also asks how the cash will be used. See how a cash-out refinance works.
It differs by program. Some programs consider a property whose ratio is below one; others need the rent to cover the payment in full, at one or above, so fewer programs fit. The ratio, together with your credit, the loan size and the property, also sets how much you can borrow against the value. Ask a loan officer about the property you have in mind.
Yes. Title can be in your own name or in a company such as a limited liability company, and the owners sign as personal guarantors. We tell you which company documents to send.
Yes. Business purpose loans such as DSCR loans follow their own list of states, which is not the same as the list for home loans; a loan officer can confirm it for your property. Fidelity Residential is licensed in many states. The full, current list is on NMLS Consumer Access (opens in a new tab), or call us at 732-686-9999.
Get a quote online, or call and talk the property through with a loan officer.
Business purpose investor loans are for investment property only.
This page is general information, not a commitment to lend. Programs, terms and eligibility depend on credit, property, rent and underwriting review and are subject to change without notice.
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