[Verse 1] Sarah wants to buy a house, she's got some cash to pay But needs a loan to cover what she cannot save today The bank will look at income first, then property as well To decide what loan they'll give and terms that they will sell [Chorus] L-T-V, Loan-to-Value ratio Shows how much you borrow versus what the house will go D-S-C-R, Debt Service Coverage Rate Income over payments tells you if you'll pay on date Fixed or variable, conventional or F-H-A Know your mortgage types to finance the proper way [Verse 2] If the house costs four hundred thousand, loan is three-twenty L-T-V is eighty percent, that's the math so clearly Lower ratios mean less risk, better rates you'll see Higher down payments help you save more money monthly [Chorus] L-T-V, Loan-to-Value ratio Shows how much you borrow versus what the house will go D-S-C-R, Debt Service Coverage Rate Income over payments tells you if you'll pay on date Fixed or variable, conventional or F-H-A Know your mortgage types to finance the proper way [Verse 3] D-S-C-R checks if your income covers what you owe Monthly earnings over payments, keeps your cash flow flowing One-point-two-five or higher means the bank will likely lend Below one means you're struggling and might face a dead end [Bridge] Conventional loans need twenty percent down F-H-A loans help when your savings aren't around V-A loans for veterans, no down payment there Fixed rates stay the same, variable rates can change and scare [Chorus] L-T-V, Loan-to-Value ratio Shows how much you borrow versus what the house will go D-S-C-R, Debt Service Coverage Rate Income over payments tells you if you'll pay on date Fixed or variable, conventional or F-H-A Know your mortgage types to finance the proper way [Outro] Real estate financing, it's all about the math Calculate the ratios to stay on the right path L-T-V and D-S-C-R, mortgage types galore Now you know the basics to walk through that front door
← Real Estate Due Diligence Fundamentals | Real Estate Index Construction and Limitations →