DSCR Loans, the cornerstone investor product.
If the property's cash flow supports the payment, personal tax-return income generally does not drive the approval decision. Closes in an LLC. Scales without a per-borrower portfolio cap. The financing tool serious investors lean on to keep acquiring.
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 refinance, 70–75% cash-out.
- Min FICO: 660 on most programs; 680+ for higher LTV.
- DSCR floor: industry standard is 1.00. We have programs that go below — DSCR as low as 0.75 with adjusted program terms (higher reserves and adjusted pricing, quoted file-specific), plus no-ratio / no-DSCR-minimum programs with adjusted program terms, pricing quoted file-specific. Qualification bands at 1.20+ and 1.25+ ratios reflect cleaner program eligibility tiers, file-specific terms apply.
- Property: non-owner-occupied 1–4 unit (some programs 5–10 unit). Closing in LLC widely allowed.
- Reserves: typically 3–6 months PITIA (principal, interest, taxes, insurance, association dues) on subject property.
What DSCR actually is
Debt-Service Coverage Ratio = monthly rental income ÷ total monthly property payment, including principal, interest, taxes, insurance, and association dues if applicable.
- DSCR above 1.0, property cash-flows positively.
- DSCR at 1.0, rent exactly covers the mortgage payment.
- DSCR below 1.0, negative cash flow; some programs allow with rate and reserve adjustments.
The lender isn't analyzing your personal debt-to-income ratio. The question is whether the property covers itself.
How rental income is documented
- Purchase of a vacant property: the appraiser provides a market-rent analysis used for DSCR qualification.
- Purchase of a tenant-occupied property: existing lease plus 2 months of bank statements showing rent receipts.
- Refinance: existing lease plus recent rent-receipt history.
- Short-term rental: see our short-term rental financing page, a different income basis is available for vacation rentals.
Worked example — Phoenix-area rental
Investor purchasing a $400,000 single-family rental in Mesa. Putting 25% down ($100,000). Loan amount $300,000. Total monthly property payment approximately $2,400. Appraiser's market-rent analysis sets rent at $2,800.
- DSCR = $2,800 ÷ $2,400 = 1.17
- The property clears standard DSCR requirements comfortably, allowing the loan to qualify without personal-income underwriting.
- Qualification bands at 1.20+ and 1.25+ ratios reflect cleaner program eligibility tiers, file-specific terms apply.
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.
Typical DSCR leverage ranges
Specific leverage available depends on credit, property type, rent coverage, reserves, loan size, and investor guidelines, all subject to investor approval. As a general framework:
- Purchases: up to around 80% in stronger scenarios
- Rate/term refinance: commonly around 75%
- Cash-out refinance: commonly around 70–75%
- Lower-DSCR scenarios: may require larger down payments or lower leverage
Detailed leverage tiers (click to expand)
| Transaction | Standard max leverage | With DSCR 1.25+ |
|---|---|---|
| Purchase, 1-unit | 80% | 80% |
| Purchase, 2–4 unit | 75% | 75% |
| Rate-and-term refinance | 75% | 75% |
| Cash-out refinance, 1-unit | 70–75% | 75% |
| Cash-out refinance, 2–4 unit | 70% | 70% |
| Sub-1.0 DSCR scenarios | 5–10% lower than standard | — |
Indicative only. Specific guidelines and overlays vary by program guideline.
Why serious investors eventually move toward DSCR
Conventional financing works extremely well early in portfolio growth. But eventually investors run into:
- Property-count limits at the conventional cap
- Tighter reserve requirements as portfolios grow
- Personal-income constraints that compound across multiple files
- Underwriting friction that slows acquisition velocity
DSCR financing shifts the focus back to the property's cash flow, allowing many investors to keep scaling long after conventional financing becomes restrictive. It's portfolio infrastructure, not just an alternative product.
Common DSCR questions
Can I refinance after rehab?
Yes. Most DSCR cash-out programs have a 3–6 month seasoning requirement (the time you've owned the property before refinancing). The appraisal uses the post-rehab value, a core feature of the buy-rehab-rent-refinance-repeat strategy.
How fast do DSCR loans close?
Often 21–30 days on clean files. DSCR closings move quickly because they skip personal income documentation. The longest items are usually appraisal turnaround and entity documentation.
Can I use projected Airbnb income?
Yes on select short-term rental programs. The income basis can be 12-month actual short-term rental history, or projected market rent, depending on the property and program. See our short-term rental financing page for the path.
Can DSCR loans help me scale faster than conventional?
For many investors, yes. DSCR has no Fannie/Freddie 10-property cap, generally doesn't impact your personal debt-to-income for future qualifying, and underwrites on the property's merits rather than your personal income. The acquisition-velocity advantage matters most past 4–6 properties.
Can I finance multiple properties at once?
Yes. Some DSCR programs allow blanket loans covering multiple properties under one financing instrument. Others process simultaneous individual loans across several properties. We coordinate timing on multi-property acquisitions.
Can I close in an LLC?
Yes. DSCR is one of the few programs that allows closing in the name of an LLC, partnership, or revocable trust. Many investors prefer it for liability separation and entity-level portfolio management.
What if rent doesn't cover the payment?
Some programs accept DSCR ratios as low as 0.75 with adjusted program terms. Below that, "no-ratio" programs (which don't require a minimum coverage) can sometimes work with further adjusted program terms, file-specific. All subject to investor approval.
Is there a property-count cap?
DSCR has no conventional 10-property cap. Each loan stands on the property. Some specific programs have per-program borrower caps; we route around those with program-guideline alternatives when needed.
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 self-employed alternative qualifying.
Curious if DSCR is the right fit?
Bring the property's rent estimate, target purchase price, and current portfolio structure. We'll model the right path in 20 minutes.