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The terms every real estate investor runs into — DSCR, ARV, LTV, BRRRR and more — explained in plain language.
Investor lending has its own vocabulary, and the jargon can get in the way when you're trying to compare loans and make a decision. This glossary breaks down the terms you'll run into most often, in plain language. If a term you need isn't here, ask us — we're happy to explain.
A property's rental income divided by its total monthly debt (PITIA). A DSCR of 1.0 means the rent exactly covers the payment; 1.25+ is considered strong. It's the core number a DSCR lender uses to qualify a loan.
Principal, Interest, Taxes, Insurance, and Association (HOA) dues — the full monthly cost of carrying a property. DSCR is calculated against PITIA, not just the mortgage payment.
The estimated value of a property once renovations are complete. Fix-and-flip and bridge lenders size loans against ARV to fund both the purchase and the rehab.
The loan amount divided by the property's value, shown as a percentage. Lower LTV means more equity and usually better pricing; higher LTV means more leverage and a small rate premium.
The loan amount divided by the total project cost (purchase plus rehab). Common on fix-and-flip and bridge loans, where lenders may fund up to 90% LTC.
Buy, Rehab, Rent, Refinance, Repeat — a strategy where investors buy and improve a property, rent it, pull their capital back out via a cash-out refinance, and redeploy it into the next deal.
Short-term financing used to acquire or reposition a property before a sale or long-term refinance. Often called a fix-and-flip loan when used for renovation projects.
Replacing an existing loan with a larger one and taking the difference in cash. For investors, it's a way to pull equity out of a rental without selling it.
The length of time you've owned a property or held a loan. Some programs require a minimum seasoning period before allowing a cash-out refinance.
A fee charged for paying off a loan early, often structured as a step-down (for example 5-4-3, meaning 5% in year one, 4% in year two, 3% in year three).
A loan that falls outside the conventional 'qualified mortgage' rules. DSCR loans are non-QM because they qualify on property income rather than personal income documentation.
A DSCR-style loan that skips the cash-flow ratio test entirely, qualifying on the property and borrower profile instead — useful for properties with thin or hard-to-document income.
A payment structure where you pay only interest for an initial period, lowering the monthly payment and improving short-term cash flow and DSCR.
Financing for non-US-citizen investors buying US property, typically with adjusted documentation and loan-to-value requirements.
An appraiser's estimate of a property's market rent, used alongside any existing lease to determine the income figure in a DSCR calculation.
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