DSCR Loan

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)

• 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 ratio available for review
• 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.