DSCR Loans

Debt Service Coverage Ratio (DSCR) loans are designed for real estate investors looking to qualify for a mortgage based on the property's cash flow rather than their personal income.

How DSCR Loans Work

Lenders calculate the DSCR by dividing the property's expected monthly rental income by its monthly debt obligations (principal, interest, taxes, insurance, and HOA fees). If the ratio meets the lender's requirements (typically 1.0 or higher), the property qualifies for the loan.

Why Choose a DSCR Loan?

• No personal income verification required (no W-2s or tax returns).
• Unlimited number of financed properties allowed.
• Perfect for expanding your real estate investment portfolio quickly.
• Available for long-term rentals and short-term rentals (like Airbnb).
• Can close in an LLC or corporate entity name.

Who is Eligible?

• Real estate investors looking to purchase or refinance rental properties.
• Borrowers whose investment property generates enough rent to cover the mortgage payment (DSCR ≥ 1.0).
• Minimum credit scores usually around 660-680.
• Down payment of at least 15-20%.

What is the Process?

1. Property Analysis: We evaluate the property's current or projected rental income versus the expected loan payment to calculate the DSCR.
2. Pre-Approval: We review your credit and liquid assets (reserves are often required).
3. Appraisal & Rent Schedule: An appraiser determines the property's market value and completes a 1007 Rent Schedule to verify market rents.
4. Underwriting: The loan is approved based on the property's cash flow, not your personal tax returns.
5. Closing: You close the loan, often in the name of an LLC or corporation.

Is Mortgage Insurance Required?

No. Because DSCR loans are considered commercial/investment loans and typically require a down payment of 20% or more, Private Mortgage Insurance (PMI) is not required.