What Is a DSCR Loan?
Debt Service Coverage Ratio (DSCR) loans are specialized investment property loans designed for real estate investors. Unlike traditional mortgages, qualification is based entirely on the property's rental income rather than the borrower's personal income (W2s or tax returns).
This makes them perfect for investors looking to scale rapidly without the strict debt-to-income (DTI) limitations of conventional financing.
The DSCR Formula
Monthly Debt (PITI)
Principal, Interest, Taxes & Insurance
Target Ratio
1.0+ Typical Qualification
DSCR Ratio Explained
Cash Flow Negative
Property debt exceeds rental income. Qualification is harder and requires larger down payments or stronger credit.
Break Even
Rental income exactly covers the mortgage payment. Standard threshold for many DSCR loan approvals.
Strong Cash Flow
Rental income comfortably exceeds debt obligations. Yields the best interest rates and lowest down payments.
DSCR Loan Benefits
No Income Verification
No W2s, pay stubs, or tax returns required.
Qualify on Cash Flow
Approval is based directly on the property's rental potential.
Unlimited Properties
No limit on the number of financed properties you can own.
Faster Closings
Less paperwork means a streamlined, quicker underwriting process.
LLCs Allowed
Close in the name of an LLC or corporation for liability protection.
Short-Term Rentals
Eligible for Airbnb, VRBO, and other short-term rental strategies.
Program Details
- Loan amounts up to $5M
- LTV up to 85% on purchase / 80% on cash out refinance
- Minimum credit score 620
- 30-year fixed & ARM options
Who Are DSCR Loans For?
Portfolio Builders
Investors looking to acquire multiple doors rapidly without hitting DTI ceilings.
Self-Employed Investors
Entrepreneurs whose tax returns don't reflect their true cash flow capability.
First-Time Investors
Those purchasing their first rental property looking for simpler qualification.
House Hackers & Nomads
Those converting previous residences to rentals while securing new housing.