DSCR Loans

Qualify based on the property's rental income — not your personal income, tax returns, or employment history.

What Is a DSCR Loan?

A DSCR (Debt Service Coverage Ratio) loan qualifies you based on one simple question: does the property's rental income cover the mortgage payment? If the rent covers the debt, you qualify. No W-2s. No tax returns. No employer verification.

The DSCR is calculated by dividing the property's gross rental income by the total monthly debt obligation (principal, interest, taxes, insurance, and HOA). A DSCR of 1.0 means the rent exactly covers the payment. Most lenders want 1.0 to 1.25, though some go as low as 0.75 for strong borrowers.

The catch nobody tells you: No two lenders calculate DSCR the same way. Some use 75% of market rent. Some deduct management fees. Some use different vacancy factors. A deal that qualifies at Lender A can fail at Lender B with the exact same numbers. That's why matching matters.

Who DSCR Loans Are For

  • Self-employed investors who write off income and don't show qualifying income on tax returns
  • W-2 professionals who want to scale a portfolio without debt-to-income ratio limits
  • Foreign nationals who can't provide US income documentation
  • Entity borrowers (LLC, Corp, Trust) building a portfolio under a business entity
  • Experienced investors who want fast closings without the paperwork of conventional loans

How It Works

The underwriting is property-focused. The lender evaluates the rental income (actual leases or market rent appraisal), the property condition, your credit score, and your experience level. Most DSCR loans close in 14-21 days because there's no income verification to slow things down.

Typical terms include 30-year fixed rates, 5/1 or 7/1 ARMs, interest-only options, and loan amounts from $75K to $5M+. Down payments typically range from 20-25% for purchase, with cash-out refinances available up to 75% LTV.

What to Watch Out For

  • Prepayment penalties — 85%+ of DSCR loans carry them. Common structures are 5-4-3-2-1 or 3-2-1 year step-downs. We disclose this upfront.
  • Rate spreads — DSCR rates run 1-3% higher than conventional. The tradeoff is speed and no income docs.
  • Insurance requirements — Higher coverage requirements can blow up your DSCR ratio. Factor insurance quotes into your numbers BEFORE you submit.
  • Seasoning requirements — Some lenders require 6-12 months of ownership before a cash-out refinance.

DSCR Loan vs. Conventional

Conventional loans (Fannie/Freddie) cap you at 10 financed properties and require full income documentation. DSCR loans have no property count limit and no income docs. The tradeoff is higher rates and usually a larger down payment. For investors scaling beyond 4-5 properties, DSCR is often the only viable path.

Run Your Numbers First

Use our Deal Analyzer to calculate your DSCR ratio, cash flow, and cash-on-cash return before you submit. Know your numbers. Then let us find the right match.

DSCR Quick Facts

  • Min DSCR 0.75 - 1.25
  • Min Credit Score 620 - 680
  • Down Payment 20 - 25%
  • Loan Terms 30-yr Fixed, ARM
  • Max LTV 75 - 80%
  • Close Time 14 - 21 days
  • Income Docs None
  • Property Types SFR, 2-4, Condo

Best For

  • Buy & hold investors
  • Self-employed borrowers
  • Portfolio builders
  • Foreign nationals
  • Entity (LLC) borrowers
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DSCR Loan FAQ

Most lenders require a minimum DSCR of 1.0, meaning the rent covers the full payment. Some lenders go as low as 0.75 for borrowers with strong credit (720+) and larger down payments (30%+). The sweet spot is 1.25 or higher — that gives you the best rates and most lender options.

Yes. If the property is vacant, most lenders will accept a market rent appraisal — an appraiser's estimate of what the property would rent for. Some lenders discount this by 10-25% as a vacancy factor. If you have signed leases, those typically get full credit.

It depends on the lender. Most DSCR loans made to an LLC or entity do NOT report to personal credit bureaus. Loans in your personal name may report. Ask before closing if this matters to your strategy.

Yes. Cash-out refinances are available up to 70-75% LTV on most DSCR programs. Some lenders require 6 months of seasoning (ownership) before allowing cash-out. This is a common strategy for the BRRRR method — Buy, Rehab, Rent, Refinance, Repeat.

No. Hard money loans are short-term (6-24 months) with higher rates and are designed for bridge or fix-and-flip scenarios. DSCR loans are long-term (30-year) permanent financing. However, many investors use hard money to acquire and rehab, then refinance into a DSCR loan for the long hold.

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