The core product
DSCR loans, explained the way I explain them on the phone
TL;DR
A DSCR loan is a business-purpose mortgage on a rental property that qualifies mainly on whether the rent covers the payment, not on your personal income or tax returns. Lenders divide monthly rent by the full monthly payment; the higher that ratio, the more options you have. I am a broker: I arrange these loans by shopping wholesale lenders, I do not fund them.
What DSCR actually stands for
DSCR is short for debt service coverage ratio. In plain English: does this property pay for itself? Commercial lenders have used the idea for decades on apartment buildings and shopping centers. DSCR loans bring the same logic down to single-family rentals, condos, townhomes and small multifamily buildings.
The reason investors care is simple. A conventional investment mortgage wants to see your W-2s or two years of tax returns, then stacks every property you own against your personal income. Once you have a few rentals, or once your accountant has done a good job of writing off expenses, that math stops working. A DSCR loan looks at the property first.
How the ratio is calculated
Take the monthly rent. Divide it by the full monthly housing payment, which lenders call PITIA: principal, interest, taxes, insurance and association dues. That is the whole formula.
Worked example (your numbers will differ)
Monthly rent ............................ $2,400
Principal + interest (as quoted) ........ $1,520
Property taxes ($3,600 / 12) ............ $300
Insurance ($1,500 / 12) ................. $125
HOA ..................................... $0
PITIA ................................... $1,945
DSCR = 2,400 / 1,945 = 1.23
A 1.23 means the rent covers the payment with roughly a quarter left over. A 1.00 means it breaks even. Below 1.00, the rent does not quite cover it, which narrows the menu but does not always end the conversation. You can run your own numbers on the DSCR calculator in about a minute.
Who a DSCR loan fits
- Self-employed investors whose tax returns understate what they really earn.
- Investors who already own several rentals and have hit the wall on conventional debt-to-income limits.
- Buyers who want to close in an LLC rather than in their personal name.
- Short-term rental operators whose income is real but lumpy.
- Anyone who wants to scale a portfolio without re-proving personal income on every purchase.
It does not fit anyone who plans to live in the property. Every loan I arrange through this site is business-purpose, on non-owner-occupied investment property only.
What lenders still look at
No personal income verification does not mean no underwriting. Wholesale lenders still review your credit, the cash you need to close, reserves after closing, the appraisal, the rent (from a lease, a market rent survey on the appraisal, or both), title and the property condition. If you are borrowing in an entity, they will want the formation documents.
Each lender weighs those factors differently. That is the whole reason a broker is useful here: one lender may love your scenario and another may pass on it for a reason that has nothing to do with you.
The four ways I usually use DSCR financing
Buying a rental
The most common file. You find the property, I test the rent against the payment before you write the offer, then I shop it. See DSCR purchase loans for the details.
Pulling cash out
You own a rental with equity and want to redeploy it. A DSCR cash-out refinance qualifies on the property, so the new payment has to be covered by the rent.
Short-term rentals
Vacation and furnished rentals can qualify, with some lenders using booking history or market data instead of a twelve-month lease.
Two to ten units
Duplexes through small apartment buildings. The rent from every unit counts toward the coverage test.
Why I do not post pricing on this site
DSCR pricing moves with your credit, the ratio, the loan size, the property type, the prepayment structure you choose and the market that week. Any number I put on a web page would be wrong for most readers by the time they read it. Instead, send me the scenario and I will come back with real pricing from the wholesale lenders that fit it.
Pick the DSCR loan that matches your move
Buy a rental
Qualify on the rent the property will earn. I run the ratio before you write the offer.
Read more
Cash-outPull equity out
Turn rental equity into the next down payment, sized to what the rent can carry.
Read more
STRAirbnb and vacation rentals
Booking history, market studies or long-term rent: I match the lender to the method.
Read more
2-10 unitsDuplex to ten units
Every unit rent counts. I shop residential and small-balance commercial programs.
Read more
Questions investors ask me about this
What DSCR do I need to qualify?
There is no single cutoff. Many wholesale lenders are most comfortable at 1.00 or higher, the best menus usually open up around 1.20 to 1.25, and some programs will look at coverage below 1.00 with stronger credit and reserves. I test your number against several lenders rather than one rulebook.
Do DSCR loans require tax returns?
Typically no. The loan qualifies on the property rather than on personal income, so most DSCR programs do not ask for tax returns, W-2s or pay stubs. Lenders still review credit, assets, reserves and the property.
Can I live in a property financed with a DSCR loan?
No. DSCR loans arranged through this site are business-purpose loans for non-owner-occupied investment property only. If you will live there at any point, this is not the right product and I cannot take the request.
Is a DSCR loan the same as a hard money loan?
No. Hard money is short-term bridge financing built around a quick exit. A DSCR loan is long-term financing on a stabilized rental, usually with a fully amortizing term. The DSCR vs hard money comparison covers when each fits.
Want me to run your numbers?
Send me the property, the rent and what you are trying to do. I will run the coverage math, tell you where it stands, and shop it with wholesale lenders if it makes sense.