When you’re buying investment properties in Miami or anywhere across South Florida, understanding how financing works can make or break your deal. Three essential terms to know are Loan-to-Value (LTV), Adjustable Rate Mortgages (ARMs), and Debt Service Coverage Ratio (DSCR). Let’s break them down in a way that actually makes sense.

What is Loan-to-Value (LTV)?

LTV measures how much you’re borrowing compared to the value of the property. For example, if the property is worth $600,000 and you borrow $480,000, your LTV is 80%. Lower LTVs typically mean better rates, lower risk to lenders, and higher equity for you.

Pro tip: Lower your LTV with a higher down payment to access more favorable loan programs.

What is an Adjustable Rate Mortgage (ARM)?

ARMs are loans with interest rates that can change over time. They usually start with a lower rate for the first few years, then adjust periodically. While this can be beneficial in the short term, ARMs can be unpredictable if interest rates rise—which is something every investor should consider.

In today’s fluctuating market, ARMs might not be the ideal option unless you plan to refinance or sell before the rate resets.

What is DSCR (Debt Service Coverage Ratio)?

DSCR is especially important for real estate investors. It measures the property’s income versus its debt payments. In simple terms:
DSCR = Net Operating Income ÷ Debt Payments
If your DSCR is above 1, it means the property generates enough income to cover the loan. Many lenders, including us at LendingwithNelly, look for a DSCR of 1.25 or higher to approve investment loans.

DSCR loans are ideal for investors who want to qualify based on rental income—not personal income or tax returns.

Watch & Learn: DSCR, LTV & ARMs Explained

Hit play below to hear a quick breakdown of LTV, ARMs, and DSCR in real-world language.This short video will walk you through how these terms apply to investment properties and how to use them to your advantage.