DSCR Loans (Debt Service Coverage Ratio Loans) for Real Estate Investors

A DSCR Loan—Debt Service Coverage Ratio Loan—is designed specifically for real estate investors who want to qualify based on the income of the property rather than their personal income.

These loans are extremely flexible and are popular with both experienced investors and first-time investors (defined as someone who has not owned an investment property in the past 3 years).

A DSCR loan is only for rental properties. No primary residences allowed.

☑️How a DSCR Loan Works

Instead of reviewing tax returns, W-2s, or pay stubs, lenders qualify you using a simple formula:

Rental Income ÷ PITIA=DSCR

What PITIA includes:

  • Principal

  • Interest

  • Taxes

  • Insurance

  • Association dues (HOA, if applicable)

The rental income must cover the mortgage payment (a DSCR of 1.0 or higher).

Some programs allow DSCR below 1.0 with compensating factors like excellent credit or a larger down payment.

☑️Eligible Property Types

You can use DSCR financing for:

  • Single-family homes

  • Condominiums

  • PUDs (Planned Unit Developments)

  • 2–4 unit properties

  • Some short-term rentals (Airbnb/VRBO), depending on the program

  • Properties can be located anywhere in the U.S.

What counts as rental income?

  • A current lease agreement or,

  • Market rent figures from the appraisal

*This makes DSCR loans flexible for properties that are vacant or newly leased.

☑️Why Investors Choose DSCR Loans

  • Qualify using property income only, not personal income

  • No tax returns or employment documentation

  • Streamlined approvals and faster closings

  • Ideal for self-employed borrowers or anyone with complex finances

  • Great for building and scaling rental portfolios

  • Works for both purchases and refinances (including cash-out)

  • Available for properties inside and outside California

A widely used, in-demand program for today’s real estate investors.

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