The process of paying off a loan through regular payments over time, with each payment

covering both principal and interest.

The estimated value of a property after renovations are completed. Used to determine loan

amounts for fix-and-flip projects.

A short-term loan used to bridge the gap between purchasing a new property and selling an

existing one or securing long-term financing.

A refinance transaction where the borrower takes out a new loan larger than the existing

mortgage and receives the difference in cash.

A ratio that compares a property's net operating income (or gross rent) to its debt

obligations. Calculated as: Monthly Rent ÷ Monthly Mortgage Payment (PITIA).

A timeline for disbursing construction or renovation loan funds in stages as work is

completed and inspected.

A ratio comparing a borrower's monthly debt payments to their gross monthly income. Not

used in DSCR loans.

A short-term loan secured by real estate, typically funded by private investors rather than

banks. Often used for fix-and-flip projects.

A loan payment structure where the borrower pays only interest for a set period, with no

principal reduction.

A ratio comparing the loan amount to the total cost of a project, including purchase price

and renovation costs.

A ratio comparing the loan amount to the appraised value of the property. Higher LTV =

more leverage but higher risk.

A non-qualified mortgage that doesn't meet standard agency guidelines. Includes DSCR

loans, bank statement loans, and other alternative documentation programs.

Principal, Interest, Taxes, Insurance, and Association dues—the full monthly housing

payment used to calculate DSCR.

A fee charged if the borrower pays off the loan early. Common structures include 5-4-3-2-1

(declining penalty over 5 years) or 3-2-1.

A non-bank lender that provides loans funded by private capital rather than deposits. Often

more flexible than traditional banks.

A document listing all rental units in a property, their tenants, lease terms, and monthly rents. Used to verify income for DSCR loans.

A property rented on a nightly or weekly basis, typically through platforms like Airbnb or

VRBO.

A preliminary document outlining the proposed terms of a loan, including rate, LTV, fees,

and conditions.

The process of evaluating a loan application to assess risk and determine whether to

approve financing.