Financing
DSCR Loans
Debt Service Coverage Ratio loans qualify based on the property's rental income — not your W-2 or tax returns. The go-to tool for scaling a rental portfolio without conventional income limits.
How It Works
The lender looks at the property's rent-to-payment ratio. If the monthly rent covers the mortgage payment (plus taxes, insurance, and sometimes HOA), the loan qualifies. Your personal income isn't the primary factor.
DSCR = Monthly Rental Income ÷ Monthly PITIA. Most lenders want 1.0x (break-even) to 1.25x (20% cushion). A property renting for $2,000/month with a $1,600 total payment has a 1.25 DSCR.
Who Uses DSCR Loans
- • Investors with multiple properties who can't qualify for more conventional loans
- • Self-employed borrowers with complex tax returns that understate income
- • Investors scaling quickly who don't want income documentation delays
- • LLC borrowers — DSCR lenders are often more LLC-friendly than conventional lenders
Typical Terms
- • Rate: 1–2.5% higher than conventional (currently ~7–9% range)
- • Down payment: 20–25% typical
- • Terms: 30-year fixed, 5/1 ARM, or interest-only options
- • Credit: Usually 680+ minimum, better rates at 740+
- • Closing: 2–4 weeks — faster than conventional
DSCR vs. Conventional Investment Loan
| Factor | DSCR | Conventional |
|---|---|---|
| Qualification | Property income | Personal income + DTI |
| Rate | Higher | Lower |
| Speed | Faster | Slower |
| LLC allowed | Often yes | Rarely |
| Best for | Scaling investors | Simpler deals |
Want to know if a DSCR loan fits your deal? Send me the property details and I'll run the numbers.