DSCR Loans
The cornerstone investor product. Property rent ÷ property PITIA = DSCR. If the property cash-flows, it qualifies — your personal tax return doesn't enter the calculation. Closes in LLC, scales without portfolio limit.
Quick answer
- Income source: the property's rent — covers the property's mortgage payment.
- Personal income required? No. Tax returns, paystubs, and personal DTI are not used.
- Loan amount: typically up to $3M on residential 1–4 unit; some programs higher.
- Max LTV: 80% purchase, 75% rate-and-term refi, 70–75% cash-out.
- Min FICO: 660 on most programs; 680+ for higher LTV.
- Min DSCR: 1.00 on most; pricing improvements at 1.20+ and 1.25+. Some programs accept <1.0 with rate / reserves penalty.
- Property: non-owner-occupied 1–4 unit (some programs 5–10 unit). Closing in LLC widely allowed.
- Reserves: typically 3–6 months PITIA on subject property.
What "DSCR" actually is
Debt-Service Coverage Ratio = property monthly rental income ÷ property monthly PITIA (principal + interest + taxes + insurance + association dues).
- DSCR > 1.0 — property cash-flows positively.
- DSCR = 1.0 — rent exactly covers the mortgage payment.
- DSCR < 1.0 — negative cash flow; some programs allow with rate/reserve penalty.
The investor doesn't care about your personal DTI. They care that the property covers itself.
How rental income is documented
- Purchase, vacant property: appraiser's market rent estimate (FNMA Form 1007 / Form 1025 for 2–4 unit) — establishes "rent" for DSCR math.
- Purchase, tenant-occupied: existing lease + 2 months bank statements showing rent receipts.
- Refinance: existing lease + recent rent-receipt history.
- Short-term rental: see our STR / Airbnb page — different income basis available.
Worked example — Phoenix-area rental
Investor purchasing a $400,000 SFR in Mesa. Putting 25% down — $100K. Loan amount $300,000. Monthly PITIA approximately $2,400. Appraiser sets market rent at $2,800.
- DSCR = $2,800 ÷ $2,400 = 1.17
- Most programs accept ≥1.00; pricing improves at 1.20 / 1.25.
- File underwrites cleanly. No personal income calculation runs.
What you'll need
- Property address + purchase contract (or current loan info if refinance).
- If tenant-occupied: lease + recent bank statements showing rent receipts.
- 2 months of personal asset statements showing reserves (3–6 mo PITIA in liquid).
- Standard mortgage docs (ID, credit pull).
- Not required: tax returns, paystubs, W-2s, employment verification.
LTV tiers (indicative)
| Transaction | Standard max LTV | With DSCR ≥ 1.25 |
|---|---|---|
| Purchase, 1-unit | 80% | 80% |
| Purchase, 2–4 unit | 75% | 75% |
| Rate-and-term refi | 75% | 75% |
| Cash-out refi, 1-unit | 70–75% | 75% |
| Cash-out refi, 2–4 unit | 70% | 70% |
| Sub-1.0 DSCR (where allowed) | 5–10% lower than standard | — |
FAQ
Can I close in an LLC?
Yes — DSCR is one of the few programs that allow closing in the name of an LLC, partnership, or revocable trust. Many investors prefer it for liability separation.
What if rent doesn't cover the payment?
Some programs accept DSCR as low as 0.75, with adjusted rate and reserves. Below 0.75 is typically a 'no DSCR' / 'no ratio' program with even higher rate.
Is there a property-count cap?
DSCR has no Fannie / Freddie 10-property cap. Each loan stands on the property. Some specific programs cap at 10–20 properties per borrower across the program; we route around that with multiple-investor placements when needed.
5–10 unit financing?
Some DSCR programs go to 10-unit. Above 4-unit becomes 'small-balance commercial' DSCR — pricing slightly higher than 1–4 unit residential DSCR.
Can I do a DSCR loan on my primary residence?
No. DSCR is non-owner-occupied only. For owner-occupied financing, look at conventional, jumbo, or alt-doc.
How long does DSCR underwriting take?
Comparable to conventional — 30–45 days typical. Faster than alt-doc personal-income files because there's no income calculation.
Curious if DSCR Loans is the right fit?
Bring the property details — we'll model real numbers in 20 minutes.