DSCR Loans

Overview

A DSCR loan, short for Debt Service Coverage Ratio loan, is designed for real estate investors. Instead of qualifying based on your personal income, the loan is evaluated on whether the property's rental income covers its mortgage payment. That makes it a flexible option for investors who want to grow a rental portfolio.

How it works

The Debt Service Coverage Ratio compares the property's rental income to its total debt payment. A ratio of 1.0 means the rent covers the payment exactly, and a higher ratio means the rent more than covers it. Because the focus is on the property's performance, personal income documentation is generally not required.

Key features

• Qualification based on the property's rental income, not personal income.
• Generally no personal income or employment documentation required.
• Well suited to single properties and growing rental portfolios.
• Available for a range of residential investment properties.

Who it is for

Real estate investors buying or refinancing rental properties who prefer to qualify on the deal rather than provide extensive personal income documentation.

What you will typically need

• Details of the property and its current or projected rental income.
• Bank and asset statements for the down payment and reserves.
• Photo identification and entity documents if you purchase through a company.
• A credit review.

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