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Short answer
A DSCR (debt service coverage ratio) loan qualifies an investment property mainly on whether its rent covers the property's monthly payment, so lenders generally do not use your personal income or tax returns to qualify you. A conventional investment property loan follows Fannie Mae or Freddie Mac rules and qualifies you on your own documented income, debts, and credit, with rental income counted under set rules. DSCR loans come from private lenders with their own guidelines, so compare the rate, down payment, and terms of both if you qualify for conventional.
| Feature | DSCR loan | Conventional investment loan |
|---|---|---|
| How you qualify | Mainly on the property's rent vs its payment | On your income, debts, credit, and allowed rental income |
| Personal income documents | Generally not used to qualify | Required (tax returns if self-employed) |
| Who sets the rules | Each private lender | Fannie Mae or Freddie Mac guidelines |
| Maximum loan-to-value | Set by the lender | Fannie Mae: 85% purchase (1 unit); 75% (2-4 units) |
| Cash-out refinance | Lender rules | Fannie Mae: up to 75% (1 unit); 70% (2-4 units) |
| Loan type | Business-purpose, usually non-QM | Conforming loan |
| Occupancy | Investment property only | Investment property (also second and primary homes under other rules) |
Conventional investment loans follow Fannie Mae or Freddie Mac guidelines. Under Fannie Mae's Eligibility Matrix, the maximum loan-to-value for buying a one-unit investment property is 85% (75% for two to four units), and the maximum for a cash-out refinance is 75% for one unit (70% for two to four).
You qualify on your full financial picture: income, assets, debts, and credit. Fannie Mae's rental income rules let lenders count rent from the property using documents such as leases or an appraiser's rent schedule (Form 1007). If you are self-employed, Fannie Mae generally asks for signed federal income tax returns for the past two years, and in some cases one year.
A DSCR loan looks mainly at the property. The debt service coverage ratio compares the property's expected rent with its monthly payment (principal, interest, taxes, insurance, and any association dues). If the rent covers the payment by the lender's required margin, the property can qualify without your personal income documents. DSCR loans are offered by private lenders, often as non-QM loans, and each lender sets its own minimum ratio, credit, down payment, and reserve rules.
Why can these loans skip personal income? Under Regulation Z's official interpretation, credit to buy, improve, or maintain rental property that is not owner-occupied is deemed to be for business purposes. Consumer mortgage rules such as the ability-to-repay rule generally apply to consumer credit, so business-purpose rental loans are underwritten under the lender's own rules instead.
A DSCR loan is often worth a close look if:
A conventional investment loan is often worth a close look if:
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A DSCR (debt service coverage ratio) loan is an investment property loan that qualifies mainly on whether the property's rent covers its monthly payment, instead of on your personal income. Private lenders offer them under their own guidelines.
Generally no, for qualifying. The lender looks at the property's rent and payment. Lenders still check credit, assets, and the property, and rules vary by lender.
Fannie Mae's Eligibility Matrix allows up to 85% loan-to-value on a one-unit investment purchase and 75% on two to four units. Lenders can set stricter rules.
Yes, under Fannie Mae's rental income rules, which use documents such as leases or an appraiser's rent schedule (Form 1007).
Under Regulation Z's official interpretation, credit for rental property that is not owner-occupied is deemed to be for business purposes, so consumer rules like the ability-to-repay rule generally do not apply.
No. DSCR loans are for investment properties that you rent to others, not for a home you live in.
This page is general education, not a loan offer, commitment, or approval. Program rules and figures change; the figures here were checked against the sources below in October 2026. Your options depend on your credit, income, property, and each lender's guidelines. All loans are subject to approval.
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This page explains the rules. For your situation, compare options yourself or talk with a licensed loan officer.