Definition

• A loan that assesses a property’s ability to cover its debt obligations through its income, focusing on the property’s cash flow rather than the borrower’s personal income.

Ideal Borrowers

• Investors with income-generating rental properties.

Down Payment

• Typically 15-25% of the property’s value.

Benefits

• Simplified qualification process; no personal income verification required.

Usage Limit

• Primarily for rental properties.

Strengths

• Allows for portfolio growth;
• flexible terms;
• focuses on property performance.

Considerations

• Higher interest rates than conventional loans;
• requires strong property cash flow.