A DSCR loan, short for Debt Service Coverage Ratio, is built for real estate investors. Instead of qualifying on your personal income and tax returns, you qualify based on whether the property's rent covers its mortgage payment.
How the ratio works
DSCR compares the property's monthly rental income to its total monthly payment. A ratio of 1.0 means rent exactly covers the payment. Higher ratios are stronger, and some lenders will consider ratios slightly below 1.0 with pricing adjustments.
Who DSCR loans fit
- Investors growing or scaling a rental portfolio
- Self-employed borrowers who prefer not to document traditional income
- Owners of long-term and short-term rentals
- Borrowers with complex tax returns or large write-offs
What to expect
Plan on a down payment around 20% to 25%, a credit score generally in the low 600s or higher, and some reserves. Properties can often be held in an LLC.
DSCR loans are one of the fastest ways to scale a rental portfolio because there is no personal income documentation. Ask us to run the numbers on your target property.