News FAQ Invest

DSCR Loans in Alabama:
Modern Financing for Investors

Veteran-owned lender, offering investors DSCR Loans in Alabama for no-income-verification, hassle-free long-term financing.

Request a DSCR Loan Learn more

Modern, long-term financing solutions

Why Choose Longleaf Lending for Your Alabama DSCR Loan Needs

Crafted with savvy Alabama investors in mind, our Long-Term DSCR Loans enable wealth building through a diverse portfolio of rental properties. By prioritizing your investment property's rental income and cash flow metrics, we simplify the loan process. As a top DSCR lender, enjoy competitive interest rates starting at 6.5%.

No Income Verification: Our no-income-verification process eliminates traditional barriers, focusing on your investment's cash flow to qualify you for a loan. This DSCR-centered approach ensures a hassle-free experience, catering specifically to real estate investors' unique needs.
Tailored to Investment Goals: Whether you're investing in short-term vacation rentals or long-term leases, our DSCR loans are crafted to align with your strategic investment plans. This versatility ensures that whatever your goals, our financing solutions fit perfectly.
Efficiency and Speed: At Longleaf Lending, we value your time. Our Alabama DSCR loan application and approval processes are optimized for efficiency, ensuring quick, smooth progress from your initial application to the final funding.
Adaptive Financing Solutions: Our financing options are as diverse as the properties you invest in. We're committed to offering flexible DSCR solutions that accommodate a wide range of property types and investor profiles.

Fast and simple

How Longleaf Lending's DSCR Loans Work

DSCR (Debt Service Coverage Ratio) loans are a type of financing used by real estate investors that focus on the income generated by the property rather than the personal income of the borrower. Here’s a simplified explanation:

Calculation.: The DSCR is calculated by dividing the property's Net Operating Income (NOI) by its total annual debt payments. NOI reflects the positive cash flow from the property after operating expenses (mortgage payment, taxes, and insurance) are subtracted.
Criteria for approval.: For Alabama, we typically require a DSCR greater than 1.0, indicating the investment property generates sufficient cash flow to cover its debt obligations. A common threshold is a DSCR of 1.0 to 1.2 or higher, but it is possible to go lower.
No personal income verification.: The approval process emphasizes the property’s cash flow potential, not the borrower's personal financial situation, allowing for more accessible financing for investors.

DSCR Loan Terms

Get the financing you need to build wealth with real estate in Alabama using our DSCR long-term 30-year investor loans.

Terms current as of June 27, 2024

Loan Value:: $75,000-$2,000,000
LTV:: Up to 80% (as is)
Interest Rate:: Starting at 6.5%
Points:: 2-3
Term:: 30 years
Closing Time:: As fast as 2 weeks
FICO:: 600 minimum

DSCR Loan Requirements Simplified

Understand DSCR Loan Alabama Requirements

Securing a DSCR Loan in Alabama involves a focused evaluation of your experience, liquidity, credit score, and investment property's income potential. Here's a summary of the current requirements you should know before applying for a DSCR Loan in Alabama:

DSCR Calculation:: Minimum of 0.65x
Credit Score:: 600 minimum
Loan Amount:: $75,000 to $3 million
Investor Experience:: none required
US Citizenship:: not required
Documentation:: Some of the key required documents include personal ID, bank statements, entity documentation if using a company (operating agreement, EIN letter, articles of incorporation), lease agreement (if currently leased), appraisal (requrested by us), and the purchase HUD (if purchased in the last 12 months).
Occupancy:: Short or long-term rentals, vacant or occupied
Property Type:: SFR, 2-4 units, multifamily 5+ units, mixed use, or commercial

Designed for Alabama investors

Build wealth through real estate with our DSCR Loans in Alabama

Alabama's Real Estate Potential: Ideal for 30-Year Rental and Long-Term DSCR Loans

Alabama's real estate market presents a compelling landscape for investors, characterized by its affordable property prices, growing economy, and diverse geographic regions. From the bustling urban centers of Birmingham and Huntsville to the tranquil Gulf Coast and rural areas, Alabama offers a variety of investment opportunities. DSCR loans in Alabama serve as a valuable financing tool for investors looking to capitalize on the state's real estate potential.

Why DSCR Loans Are Beneficial for Alabama's Market

DSCR loans are particularly advantageous in Alabama for several reasons:

Economic Growth: Alabama's economy is on the rise, fueled by sectors such as manufacturing, aerospace, and biotechnology, which drives demand for rental properties across the state.
Affordable Investment Opportunities: The state's real estate market is known for its affordability, providing investors with high-value investment opportunities and the potential for significant returns.
Streamlined Financing Process: DSCR loans simplify the financing process by focusing on the cash flow of the property rather than the personal income of the investor, enabling quicker acquisitions and portfolio expansion.

Strategic Advantages of SFR Investments in Alabama

Investing in Single-Family Residential (SFR) properties in Alabama offers strategic benefits:

Diverse Tenant Base: Alabama's growing job market and educational institutions attract a wide range of tenants, from professionals and students to families, ensuring a steady demand for rental homes.
Appreciation Potential: With the state's economy and population growth, Alabama's real estate market shows promising signs of appreciation, offering investors the chance for both rental income and long-term capital gains.

Maximizing Returns with Alabama DSCR Loans

DSCR loans in Alabama empower investors to maximize their investment potential through:

Portfolio Expansion: The flexibility of DSCR loans allows investors to expand their real estate portfolios within Alabama's diverse markets, from urban apartments to beachfront properties.
Rapid Market Entry: The efficient loan approval process associated with DSCR loans enables investors to quickly enter the market or acquire new properties, capitalizing on emerging opportunities.

Alabama's real estate market offers a unique combination of affordability, growth potential, and diversity, making it an attractive option for investors. DSCR loans provide the financial flexibility and efficiency needed to navigate this market successfully, facilitating the acquisition of properties that can generate strong rental income and appreciate in value over time. Whether new to the Alabama market or looking to expand an existing portfolio, DSCR loans offer a pathway to achieving real estate investment goals in the Heart of Dixie.

Alabama DSCR Loan frequently asked questions

: DSCR stands for Debt Service Coverage Ratio. A Debt Service Coverage Ratio loan is a type of asset based loan used by real estate investors that focuses on the cash flow generated by the property rather than the personal income of the borrower. It's designed to provide investors with leverage for acquiring or refinancing rental properties based on the property's ability to generate income.
: Debt Service Coverage Ratio is calculated by dividing the property's Net Operating Income (NOI) by its total annual debt payments, taxes, and insurance. It's a measure of the cash flow potential of the investment property. The formula is: DSCR = NOI / Annual Debt Service, Taxes, and Insurance. A DSCR greater than 1 indicates that the property generates enough income to cover its debt obligations.
: DSCR Lenders typically require a DSCR greater than 1.0, indicating the property has rental income and cash flow sufficient to cover its debt obligations. Common thresholds are a DSCR of 1.0 to 1.2 or higher, although this can vary depending the specifics of the investment property. You will also need to qualify for a minimum credit score - typically a 600 minimum.
: Yes, we require a 600 minimum for the FICO score.
: Yes, one of the main advantages of Debt Service Coverage Ratio loans is that we do not require traditional income verification. Instead, the approval process focuses on the rental income potential of the property, making it an attractive option for investors who may not qualify for traditional loans.
: DSCR loans are available for a wide range of investment properties, including single-family homes, multi-family units, condos, and commercial properties. The key requirement is that the property generates rental income.
: The timeline can vary, but we offer expedited processes allowing borrowers to receive a term sheet within 24 hours after application submission for their investment property. The entire process from application to funding can often be completed in a few weeks, often times much faster than traditional banks and mortgage processes.
: DSCR loans are typically used for acquiring new investment properties or refinancing existing ones. The primary restriction is that the property must be intended for rental and generate income.
: Interest rates for DSCR loans are generally competitive with traditional mortgage rates but can be higher due to the perceived higher risk associated with non-traditional income verification. Rates can vary based on your credit score, the DSCR ratio, and the loan-to-value (Total Debt / Property’s Valuation).

Starting at 6.5%, we offer the most competitive rates in the industry.
: We offer DSCR loans in most states.
: To begin the application process for a DSCR loan for your investment property, simply fill out our short application form at the bottom of this page. We will get you a termsheet within 24 hours.
: We will get a termsheet to you within 24 hours, and our streamlined process ensures you can get your loan funded faster than other lenders. Furthermore, we will search for the best rate and provide several options for you to consider. We’ll work with your exit strategy to make a recommendation on the best DSCR loan for you.

How is DSCR Calculated in Alabama?

In Alabama, the Debt Service Coverage Ration (DSCR) is calculated by dividing a property's rental income by it's expenses. In some cases another method could be used which involves dividing Net Operating Income (NOI) by the Debt Service.

Income: For simplicty purposes, you can think about the top line as the annual rental income for your investment property. In some cases a 90% factor might be applied.

Expenses: There are four main components of the expenses.

Principal and Interest
Taxes
Insurance
HOA fees

Here's an example so you can see exactly how DSCR is calculated. To keep things easy, we are assuming there is no principal payment, which you might expect with an interest only period. To learn more about how DSCR loans work, check out our detailed article.

About the Longleaf Lending Team

Longleaf Lending is a veteran-owned, direct lending firm with a deep focus on the real estate market. Established in Texas, we bring over two decades of combined experience in real estate, hard money lending, and investment banking.

Funding Experience: Since 2018, we have funded over 600 hard money loans, totaling more than $125 million in loan value.
Expert Leadership: Our leadership includes co-founders Pete Underwood and Matt Weidert, who bring extensive experience from real estate investment, investment banking, and military service.
Commitment to Innovation: We are committed to providing innovative real estate solutions, with a strong focus on integrity and professionalism as a member of the American Association of Private Lenders.

For more about our journey and the dedicated team behind Longleaf Lending, visit our full About Us page.

Recent DSCR Loan news from Longleaf

Market trends, case studies, investment strategies, and success stories.

February 29, 2024

DSCR loans: What is it and how it works?

Learn all about DSCR loans, what is it, and how real estate investors can benefit from it.

January 15, 2024

A Guide to Real Estate Comps: What is it and How to Find Them?

Let's talk about real estate comps, how they are used, factors to consider, and how to find them in this article.

November 16, 2023

Maximizing Cash Flow: Tips for Managing Rental properties

Useful tips for renting out your investment property whether for long-term or short-term rental. Check it out here.

Start your DSCR Loan funding today

Ready to propel your Alabama rental project forward? Our simple loan request process is designed to get you the funding you need quickly and efficiently.

Submit our Online Form

Begin by filling out our short form. It's straightforward and only takes a minute. Provide us with some basic information about you and your project.

Get a Term Sheet in less than 24 Hours

After submitting your form, you'll receive a detailed term sheet from us within 24 hours. This term sheet will outline the terms of your loan and give you the confidence to proceed with your project.

Get Funded

Experience fast and straightforward funding. At Longleaf Lending, you'll work directly with our team throughout the entire process, from application to funding.

Applying does not affect your credit score

Apply for a Alabama DSCR Loan in 60 Seconds

Begin the funding process by completing our short online form.

DSCR Loans in Alabama:Modern Financing for Investors