Qualify on the rent, not your tax returns
A DSCR loan uses a rental property’s income instead of your personal income. No pay stubs, no tax returns. Close in your own name or an LLC, and build a portfolio.
How is DSCR calculated?
DSCR stands for Debt Service Coverage Ratio, and it is basically the whole loan in one number. Instead of your personal income, it compares the property’s rent to its mortgage payment.
Where PITIA is principal, interest, taxes, insurance, and any HOA dues. Example: a rental brings in $2,500 a month, and the full monthly payment is $2,000. That is $2,500 ÷ $2,000, a 1.25 DSCR. A DSCR of 1.0 means the rent exactly covers the payment. Above 1.0 means positive cash flow. Many programs look for around 1.0 to 1.25, and some go lower, even below 1.0.
If the DSCR comes in low, we are not stuck. On some programs we can use your assets to help you qualify, leaning on your liquid savings or investments to strengthen the file. It is one more lever a broker can pull that a single lender might not offer.
Try the DSCR calculator
Enter your numbers to see the estimated payment and DSCR for a property. Use your own rate; nothing here is a quote.
Rate is your estimate. This is an illustration, not a quote or approval.
What does a DSCR loan require?
Guidelines vary by lender. Typical ranges:
| Factor | Typical (varies by lender) |
|---|---|
| Down payment | Generally 20% to 25% |
| Credit | Stronger credit earns better terms. No single cutoff. |
| Reserves | Often a few months of PITIA in the bank |
| DSCR | Many programs want about 1.0 or higher. Some allow lower, or assets to offset. |
| Property types | Single-family, 2 to 4 unit, condo, some non-warrantable. Short and long-term rentals. |
| How you hold title | Your own name or an LLC |
| Number of properties | Many programs have no cap. Build a portfolio. |
| Prepayment | Some programs carry a prepayment penalty. Varies. |
DSCR vs. your other investor options
| DSCR loan | Conventional investment | Hard money | |
|---|---|---|---|
| Qualifies on | The property’s rent | Your personal income and tax returns | Mostly the asset, short term |
| Documentation | Low-doc | Full-doc | Light, fast |
| Speed to close | Fast | Standard | Fastest |
| Entity (LLC) | Yes | Often no | Yes |
| Best for | Portfolio builders, self-employed investors | W-2 investors with clean docs | Short-term flips and bridge |
DSCR is not automatically the best choice. Sometimes a conventional loan wins on price. We will compare them for your deal.
Who a DSCR loan is for
A DSCR loan tends to fit if you are self-employed or 1099 and your tax returns understate your cash flow, an investor who has hit the financed-property limits on conventional loans, buying in an LLC or building a portfolio, a short-term rental investor, or someone who would rather keep tax returns out of the qualifying.
DSCR loan FAQs
Can I close a DSCR loan in an LLC?
Yes. Many DSCR programs let you hold title in an LLC, which is one reason investors like them.
Do DSCR loans check my personal income or DTI?
No. DSCR loans qualify on the property’s rental income versus its payment, not your personal income, tax returns, or debt-to-income ratio.
Can I use short-term or Airbnb income?
Often, yes. Several DSCR programs allow short-term-rental income. Guidelines vary, so we will match you to a lender that fits your strategy.
What if my DSCR is below 1.0?
You may still have options. Some programs allow a sub-1.0 or no-ratio DSCR, and on some we can use your assets to help you qualify. It is worth a conversation before assuming a property will not work.
How many DSCR loans can I have?
Many programs have no cap on the number of financed properties, so you can keep building a portfolio.
Can I do a cash-out refinance with a DSCR loan?
Yes. DSCR cash-out refinances are common for pulling equity out of a rental to fund the next purchase.
Is there a prepayment penalty?
Some DSCR programs have one and some do not. It is often a trade-off against the rate. We will show you both.