Want to buy rental properties but don’t want to jump through hoops proving your personal income? DSCR loans might be exactly what you need.
What is a DSCR Loan?
DSCR = Debt Service Coverage Ratio
Instead of verifying your personal income (W-2s, tax returns, pay stubs), lenders look at whether the property itself generates enough cash flow to cover the mortgage.
The Simple Formula:
Monthly Rent > Monthly Mortgage Payment = Approved
If the property rents for more than it costs to finance, you qualify. It’s that straightforward.
Who DSCR Loans Are Perfect For
- ✅ Real estate investors building a portfolio
- ✅ Self-employed individuals with high deductions
- ✅ Business owners with complex tax situations
- ✅ Anyone wanting to invest without documenting income
DSCR Loan Requirements
| Factor | Typical Requirement |
|---|---|
| Credit Score | 620-700+ |
| Down Payment | 20-30% (investment properties) |
| DSCR Ratio | 1.0+ (some lenders accept 0.75+) |
| Property Type | Single-family, multi-family, condos, townhomes |
| Loan Amount | Usually $125K+ (varies by lender) |
Why Investors Love DSCR
- No income docs — Skip the tax return gymnastics
- Fast approval — Less documentation = faster closing
- Scale up — Easy to buy multiple properties
- Flexible — Refinance or purchase new properties
Types of DSCR Loans
Fixed-Rate DSCR
- 30-year fixed rates
- Predictable payments
- Best for long-term hold strategies
DSCR ARMs
- Adjustable rates (usually 5/6 or 7/1)
- Lower initial rates
- Good if you plan to sell or refinance in a few years
Cash-Out DSCR
- Pull equity out of existing properties
- Use for repairs, upgrades, or new purchases
Calculating DSCR
Example:
- Property purchase price: $300,000
- Down payment (25%): $75,000
- Loan amount: $225,000
- Monthly PITIA: $1,800
- Projected rent: $2,400
DSCR = $2,400 / $1,800 = 1.33
Result: 1.33 > 1.0 → Approved!
Investment Property Strategy
DSCR loans are ideal for:
- House hacking — Live in one unit, rent others
- BRRRR method — Buy, Rehab, Rent, Refinance, Repeat
- Multi-family — 2-4 units under one loan
- Long-term rentals — Build passive income
Things to Know
- Interest rates are slightly higher than traditional loans (offset by no income verification)
- Reserves — Some lenders require 6+ months reserves
- Appraisal — Must confirm rental income potential
Ready to Invest?
Whether you’re buying your first rental or expanding your portfolio, DSCR loans open doors that traditional financing closes.
Tell us about your investment goals and we’ll find the right DSCR program for you.
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