Investment property financing

The property qualifies. Not your tax return.

A DSCR loan looks at what the place rents for, not what your Schedule E says you earned. No tax returns, no W-2s, no pay stubs — and your personal debt-to-income ratio never enters the conversation.

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What a DSCR loan actually is

DSCR stands for debt service coverage ratio. It's one number: the rent divided by the payment. If a property brings in more than it costs to carry, it covers itself — and that's the whole underwriting question.

Conventional financing asks about you: your income, your tax returns, your existing debts, how many properties you already have. DSCR asks about the property. That difference is why investors end up here, usually after a conventional lender told them they'd hit a wall.

These are business-purpose loans on non-owner-occupied property, which is why you can close in an LLC and why there's no cap on how many you hold.

The DSCR formula Gross monthly rent divided by PITIA — principal, interest, taxes, insurance and HOA — equals the debt service coverage ratio. An example shows 2,400 divided by 2,000 equals 1.20. Gross monthly rent lease amount, or market rent if vacant = PITIA — the full payment principal + interest + taxes + insurance + HOA Example $2,400 ÷ $2,000 = 1.20
Rent over payment. That's the entire calculation.

What your number means

Ranges vary by lender — these are the bands most programs price around.

DSCR ranges and what they mean Below 1.0 the rent does not cover the payment and financing is possible but costs more. From 1.0 to 1.19 the property breaks even and most programs open up. From 1.2 to 1.34 pricing improves. At 1.35 and above the property carries itself comfortably and gets the best terms. Below 1.00 Rent short of payment
Doable on some programs — expect a higher rate or more down.
 1.00 – 1.19 Breaks even
The common floor. Most DSCR programs open up here.
 1.20 – 1.34 Comfortable
Where pricing usually starts improving.
 1.35 + Strong
Best terms available on the product.

DSCR calculator

Put in the rent and the payment. Nothing is sent anywhere — this runs in your browser.

Debt service coverage ratio

1.20

Comfortable

Gross rent$2,400
Full payment (PITIA)$2,000
Monthly cash flow$400

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Estimates only, for illustration. Not a loan offer, a rate quote, or a commitment to lend. Actual DSCR calculations, guidelines and pricing vary by lender and by property.

DSCR vs. conventional, honestly

DSCR isn't automatically better. It's better for a specific situation.

DSCR loanConventional
Income documentationNone — the rent qualifies itTax returns, W-2s, pay stubs
Your personal DTINot calculatedCounts every financed property
Properties you can holdNo practical capEffectively capped around 10
Close in an LLCStandardRarely permitted
Typical down payment20 – 25%15 – 25% on investment
Credit score floorLow-to-mid 600s typicallyUsually 620+, better pricing higher
RateHigher than conventionalLower
Prepayment penaltyCommon — often 3 to 5 yearsNone
SpeedOften faster, less documentationSlower when income is complex
When I'd steer you to conventional instead: if you're buying your first or second rental, your tax returns show your income cleanly, and you're nowhere near the property limit — take the lower rate. DSCR earns its cost when documentation is the obstacle or when your portfolio has outgrown what conventional will count.

Who these are actually built for

You write off aggressivelyYour returns show what your CPA did, not what you earn. DSCR doesn't look at them.
You've hit the property capConventional stops counting somewhere around ten. DSCR lenders underwrite the property, so the number stops mattering.
You buy in an LLCStandard here, awkward-to-impossible on conventional.
You need to move fastLess documentation means fewer things to go wrong late in a file.
Your income is new or lumpyRecently self-employed, commission-heavy, or a year that looks strange in isolation.
You're scaling deliberatelyWhen the plan is five more doors, personal DTI is the wrong constraint to build around.

Why investors call me for these

I've been originating for 19 years and I'm a broker, not a bank — I place these with more than 200 lenders, and DSCR guidelines vary between them more than almost any other product. Minimum ratio, whether short-term rental income counts, how they treat a vacant property, prepay structure. The right answer is usually a lender-selection problem.

Sometimes “you don't qualify” really means “you don't qualify for the options I've looked at.”

If another lender ran your file and the number didn't work, that's worth a second look before you walk away from the deal.

Self-employed & bank statement loans →

DSCR questions I get every week

What is a DSCR loan?

A DSCR loan is an investment-property mortgage that qualifies on the property's rental income instead of your personal income. DSCR stands for debt service coverage ratio — the rent divided by the monthly payment. If the rent covers the payment, the deal works. No tax returns, no W-2s, no pay stubs, and your personal debt-to-income ratio never enters the conversation.

How is DSCR calculated?

Gross monthly rent divided by the full monthly payment — principal, interest, taxes, insurance and any HOA dues. That full payment is often abbreviated PITIA. If a property rents for $2,400 and the all-in payment is $2,000, the DSCR is 1.20, meaning the rent covers the payment with 20% to spare.

What DSCR do most lenders require?

Most lenders look for 1.00 or better, and pricing usually improves once you're at 1.20 to 1.25. Programs do exist below 1.00 — sometimes down to around 0.75 — but you'll pay for it in rate or down payment. Some lenders also allow a no-ratio option where the DSCR isn't calculated at all. Which one fits depends on the property, and that's the part worth a phone call.

How much do I need to put down on a DSCR loan?

Typically 20% to 25% for a purchase, with the better pricing generally starting around 25%. Cash-out refinances usually cap somewhere near 70% to 75% of value. Reserves are commonly required too — often several months of payments in the bank after closing.

What credit score do I need?

Most DSCR programs start somewhere in the low-to-mid 600s, and pricing improves meaningfully as you move up through the 700s. Because there's no income documentation, lenders lean harder on credit and equity than they would on a conventional loan.

Can I close in an LLC?

Yes, and most investors do. DSCR loans are business-purpose loans, so vesting in an LLC is standard rather than an exception — which is one of the practical reasons investors prefer them over conventional financing.

Is there a limit on how many DSCR loans I can have?

Generally no, and this is the reason experienced investors end up here. Conventional financing effectively caps you at ten financed properties and counts every one against your personal DTI. DSCR lenders underwrite the property, so portfolio size stops being the thing that ends the conversation.

Do DSCR loans have prepayment penalties?

Usually yes — commonly a declining penalty over the first three to five years, and often with a buyout option if you'd rather pay a slightly higher rate and keep flexibility. If you're planning to sell or refinance soon, tell me up front and we'll price accordingly.

Can I use short-term rental income?

Often, yes. Some lenders will use market rent, some will use documented short-term rental history from a platform statement or an AirDNA-style projection. It varies more between lenders than almost anything else in this product, so it's worth asking before you go under contract.

Send me the address and the rent

That's genuinely all I need to tell you whether it works and roughly where it prices.

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