DSCR Loans for Real Estate Investors
Qualify based on rental income, not tax returns. Perfect for self-employed investors, portfolio builders, and Airbnb operators.
What is a DSCR Loan?
Understanding Debt Service Coverage Ratio financing
DSCR = Rental Income ÷ Mortgage Payment
DSCR (Debt Service Coverage Ratio) measures whether a property's rental income can cover its mortgage payment (including principal, interest, taxes, insurance, and HOA).
Example Calculation:
• Monthly rent: $2,500
• Monthly PITI payment: $2,000
• DSCR = $2,500 ÷ $2,000 = 1.25
Result: This property qualifies with excellent terms because the rental income exceeds the payment by 25%.
Why Investors Choose DSCR Loans
Streamlined financing designed specifically for real estate investors
No Income Verification
Qualify based on the property's rental income, not your W2s, tax returns, or pay stubs.
Fast Closing
Close in as little as 10-14 days with minimal documentation. Perfect for competitive investment markets.
Flexible Property Types
Single-family, multi-family (2-4 units), condos, and townhomes all eligible. Long-term rentals and short-term rentals (Airbnb/VRBO).
Unlimited Properties
No limit on number of financed properties. Scale your portfolio without conventional loan restrictions.
Cash-Out Refinance Available
Pull equity from existing rental properties to fund more deals or renovations.
Self-Employed Friendly
Perfect for business owners, 1099 contractors, and investors with complex tax strategies that lower taxable income.
DSCR Loan Requirements
What you need to qualify for DSCR financing
DSCR Ratio
Minimum 1.0 (rental income covers mortgage payment). Higher DSCR = better rates.
Credit Score
Minimum 620, but 680+ recommended for best rates and terms.
Down Payment
Purchase: 20-25% down. Cash-out refi: 25-30% equity remaining.
Reserves
Typically 6-12 months PITI (Principal, Interest, Taxes, Insurance) in reserves.
No Income Documentation Required:
- ✗ Tax returns (1040s)
- ✗ W2s or pay stubs
- ✗ Employment verification
- ✗ Business financials
- ✓ Rent roll or lease agreement
- ✓ Market rent appraisal
- ✓ Credit report
- ✓ Bank statements (reserves)
Who Should Use DSCR Loans?
DSCR loans are perfect for these investor profiles
Self-Employed Investors
Business owners and 1099 contractors who write off significant expenses, reducing taxable income but making conventional qualification difficult.
Portfolio Builders
Investors with multiple properties who hit conventional loan limits (10 financed properties) or want faster closing without full income documentation.
Foreign Nationals
International investors purchasing US rental properties without US credit history or traditional income documentation.
Airbnb/VRBO Investors
Short-term rental operators who can demonstrate strong rental income through actual or projected occupancy and nightly rates.
Current DSCR Loan Rates & Terms
Competitive rates for investment property financing
Purchase Loans
Cash-Out Refinance
Note: Rates vary based on credit score, DSCR ratio, down payment, property type, and loan amount. Rates shown are for DSCR ≥ 1.0, 720+ credit, and 25% down.
Lower rates available for: DSCR ≥ 1.25, higher credit scores (740+), larger down payments (30%+), and shorter terms.
DSCR Loan FAQs
Can I qualify with a DSCR below 1.0?
Yes, some lenders offer DSCR loans down to 0.75 DSCR. However, you'll need a larger down payment (30%+), higher credit score (700+), and will pay a higher interest rate. Properties with strong appreciation potential may still make sense even with negative cash flow initially.
Can I use projected rent for a vacant property?
Yes! For vacant properties or properties you plan to rent, we use a market rent appraisal (Form 1007) to determine the expected rental income. The appraiser researches comparable rentals in the area to establish fair market rent.
Do DSCR loans work for Airbnb and short-term rentals?
Yes! DSCR loans are perfect for short-term rentals. We use either your actual Airbnb income (if you have 12+ months history) or a market rent analysis from an appraiser familiar with short-term rental comps in your area. Some lenders use 75% of projected STR income to be conservative.
What property types qualify for DSCR loans?
Single-family homes, 2-4 unit multi-family, condos, and townhomes all qualify. Properties must be non-owner occupied (investment properties). Both long-term and short-term rentals are eligible. No raw land, commercial, or properties requiring extensive renovation.
How many DSCR loans can I have at once?
There's no limit! Unlike conventional loans (which max out at 10 financed properties), DSCR loans have no portfolio cap. You can finance as many investment properties as you can qualify for based on credit, reserves, and down payment.
Are DSCR loan rates higher than conventional?
Yes, DSCR rates are typically 1-2% higher than conventional investment property loans due to the reduced documentation and increased flexibility. However, for self-employed investors or those who can't show traditional income, DSCR loans provide financing that wouldn't otherwise be available.
Ready to Finance Your Investment Property?
Talk to our investment property specialists to see if a DSCR loan is right for your portfolio strategy.
Licensed in Georgia, Florida, Texas, and California • NMLS #2043109