What Is a DSCR Loan?
A DSCR loan (Debt Service Coverage Ratio loan) is a type of non-QM (non-qualified mortgage) that allows borrowers to qualify based on the income generated by the property—not their personal income, tax returns, or employment history.
Instead of asking for W-2s or pay stubs, lenders look at the property’s cash flow to determine if it can cover the mortgage payments. This makes DSCR loans especially attractive to self-employed individuals, gig workers, and real estate investors.
How Does DSCR Work?
The key metric is the Debt Service Coverage Ratio (DSCR):
DSCR=Net Operating Income (NOI)Total Debt Service (Annual Mortgage Payments)DSCR=Total Debt Service (Annual Mortgage Payments)Net Operating Income (NOI)
- A DSCR of 1.0 means the property breaks even.
- A DSCR of 1.25 or higher is typically required by lenders, offering a cushion for unexpected expenses.
For example, if your rental property earns $100,000 annually and your mortgage payments total $80,000, your DSCR is 1.25—right on target.
Who Qualifies for a DSCR Loan?
To qualify, you typically need:
- A DSCR of 0 ratio available
- Vacant property allowed
- A credit score of 640+ (higher scores get better rates)
- A down payment of at least 20%
- A rental property (not a primary residence)
There’s no limit to how many DSCR loans you can have, making them ideal for scaling your investment portfolio.
Why Choose a DSCR Loan?
- No personal income verification
- Faster approval process
- Ideal for self-employed or investors
- Works for residential, commercial, or mixed-use properties
- Refinance options available (cash-out, rate reduction, term extension)
Is a DSCR Loan Right for You?
If you’re looking to invest in income-generating properties and want a streamlined, flexible financing option, a DSCR loan could be the perfect fit. It’s a smart way to leverage rental income and grow your real estate empire—without jumping through traditional hoops.
This offer is made by Better Lending who is not an agency of the federal government, nor affiliated with your current lender. The loan information used in connection with this offer was derived from the credit bureaus (Experian, Trans Union and Equifax). This is not a commitment to make a loan.
*This is not a guaranteed offer, but an advertisement to lend. To qualify you will need to provide criteria including an acceptable property appraisal, and sufficient property collateral, as well as verification of personal income, sufficient credit history and clean property title. Not all programs are applicable to all borrowers and rates are subject to change at any time based on market conditions and borrower eligibility. This is not a commitment to lend. Nothing herein shall be construed as an offer to lend nor a commitment to lend, the above statements are examples of possible scenarios.
** Better Lending is not a government agency or affiliated with a government agency.
***All above interest rate scenarios assume a rate and term of refinance single family detached, owner-occupied residence with, credit score above 740, $300,000 loan amount, Loan-to-value ratio of 75 percent or less. $1495.00 for processing and underwriting fees, two discount points as of notice date, and the establishment of an escrow account. All the above rates and savings estimated are examples consistent with the prior description.
ⁱ Interest rate and payment scenario listed contains closing costs
⁺ Up to $500 credit applied as a lender credit towards appraisal at time of closing
V2019-11-26
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