A Debt Service Coverage Ratio (DSCR) loan is designed specifically for real estate investors who want to qualify for financing based on a property’s income potential, not their personal income. Instead of verifying tax returns, pay stubs, or W-2s, lenders use the property’s rental income to determine loan eligibility. This makes DSCR loans ideal for self-employed investors, business owners, and those with complex income situations.
Lenders calculate the Debt Service Coverage Ratio by dividing the property’s gross rental income by its total monthly mortgage payments (including principal, interest, taxes, insurance, and HOA dues if applicable).
DSCR Formula Example
If a property earns $2,500/month in rent and the mortgage payment is $2,500/month, $2,500 ÷ $2,500 = 1.00 DSCR. That means the property earns 100% of the mortgage costs — a strong ratio that can be approved
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No Personal Income Verification — No tax returns, W-2s, or pay stubs needed.
Qualify Based on Rental Income — Approval is based on property cash flow.
Flexible Property Types — Single-family, multi-family (up to 10 units), condos, townhomes, and some mixed-use properties.
Ideal for Self-Employed Borrowers — Perfect for those with write-offs that reduce taxable income.
Available for Multiple Properties — Build or expand your real estate portfolio faster.
While exact terms vary by lender, most DSCR loan programs include:
Minimum DSCR: 0.75 to 1.25 (lower ratios allowed with larger down payments)
Down Payment: Typically 20–30%
Credit Score: Usually 620+ (higher scores may get better rates)
Loan Purpose: Purchase, refinance, or cash-out refinance
Property Must Generate Rental Income — Long-term or short-term rentals allowed (Airbnb/VRBO acceptable with some lenders)
Long-Term Rentals: Income based on annual lease agreements.
Short-Term Rentals: Income often based on Airbnb/VRBO data, property management statements, or market rent surveys.
We work with lenders who specialize in short-term rental DSCR loans, helping investors qualify even if the property hasn’t been rented yet.
DSCR loans are a great fit if you:
Are a real estate investor expanding your portfolio
Have significant rental income but limited taxable income
Own multiple investment properties
Want to qualify without the hassle of traditional underwriting
Plan to purchase or refinance short-term rental properties
We shop your loan across multiple wholesale lenders to ensure you’re getting the lowest possible rate and fees. We’ll walk you through every step, from pre-approval to closing, so you understand your loan terms and know you’re making the best decision for your situation.
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