DSCR Loans
Qualify investment property financing off the property's rental income, not your personal income — no tax returns or employment verification required.
- Qualification based on the property's Debt Service Coverage Ratio, not personal income
- No tax returns, W-2s, or employment verification required
- Available for single-family, multi-family, and short-term rental properties
- Can close in an LLC or personal name
- Unlimited financed properties, unlike conventional's financed-property cap
Ask About DSCR
DSCR loans strip personal income out of the qualification entirely — what matters is whether the property’s rent covers its own payment. That makes them the standard tool for investors scaling a portfolio past what conventional financing’s income documentation and financed-property caps allow.
How qualification actually works. The core calculation is simple: monthly rental income divided by the monthly mortgage payment (principal, interest, taxes, insurance, and any HOA dues). A ratio of 1.0 means rent exactly covers the payment; 1.25 means it covers it with 25% to spare. Rental income comes from an existing signed lease where one exists, or from a market rent estimate on the appraisal (an 1007 rent schedule) for a purchase or a property with no current tenant. There’s no personal income, employment, or debt-to-income calculation in the file at all — the property is underwritten essentially as its own business.
What commonly disqualifies a DSCR file. A ratio that comes in too low relative to the program’s minimum is the most common issue, though many programs will still work with a lower ratio in exchange for a larger down payment. Because there’s no personal income backstop, credit and liquidity carry more weight than they would on a conventional file — insufficient post-closing reserves or a recent significant credit event can disqualify a file even when the property’s numbers look fine on paper. Attempting to use a DSCR loan on an owner-occupied property will also disqualify it outright; the program exists for investment property only.
How it compares to conventional investment-property financing. Conventional loans on investment property still require full personal income documentation and count against Fannie Mae/Freddie Mac’s financed-property limits, which cap how many mortgaged properties one investor can carry. DSCR financing removes both constraints — no personal income file to assemble, and no cap tied to how many other properties are already financed — in exchange for a higher rate and, typically, a larger down payment. For an investor scaling past a handful of properties, DSCR is usually less about qualifying at all and more about qualifying efficiently, deal by deal.
Who This Is For
- Real estate investors who don't want to document personal income
- Investors already at Fannie Mae/Freddie Mac's financed-property limit
- Buyers of short-term rental (Airbnb) or long-term rental property
DSCR FAQs
What is DSCR?
Debt Service Coverage Ratio — the property's monthly rental income divided by its monthly mortgage payment (principal, interest, taxes, insurance). A DSCR of 1.0 means the rent covers the payment exactly.
Do I need a minimum DSCR to qualify?
Most programs want at least 1.0–1.25x, though some allow lower ratios with a larger down payment.
Can I close in my LLC?
Yes, DSCR loans are commonly closed in an LLC for liability and portfolio management purposes.
How is rental income determined for a purchase with no lease yet?
Through a market rent estimate from the appraisal, typically an 1007 rent schedule.
What happens if the DSCR is below 1.0?
A DSCR under 1.0 means the rent doesn't fully cover the mortgage payment — some programs still allow it with a larger down payment or stronger borrower credit, since the shortfall is being offset elsewhere rather than by the property itself.
Do DSCR loans have prepayment penalties?
Many do, structured as a step-down penalty over the first several years (for example, 3% the first year, 2% the second, 1% the third). Programs without one are typically available at a somewhat higher rate.
How much in reserves do I need?
Most programs want 3–6 months of the property's mortgage payment held in reserve after closing, sometimes more for a first-time investor or a lower credit profile.
Can I use DSCR financing for a short-term rental like Airbnb?
Yes, many DSCR programs qualify short-term rental income using projected or historical platform income instead of a traditional 12-month lease, though documentation requirements are stricter than for a standard long-term rental.
Ready to Talk Through DSCR?
Tell us about your situation and we'll tell you honestly what it will take to qualify.
