DSCR Loans: Qualify on the Property's Rent, Not Your Income

A DSCR loan (Debt Service Coverage Ratio) qualifies your investment property on one question: does the rent cover the payment? No tax returns, no W-2s, no employment verification, no DTI math on your personal finances. If the deal works, the deal qualifies.

How the ratio works

DSCR = monthly rent ÷ full monthly payment (principal, interest, taxes, insurance, HOA). A property renting for $2,500 with a $2,000 all-in payment has a DSCR of 1.25 — comfortably qualifying with most programs, which look for 1.0 or better. Some allow ratios below 1.0 with more down.

Why investors use DSCR instead of conventional

• No personal income docs — heavy write-offs and complex returns don't matter
• Close in an LLC — most programs allow entity vesting; conventional doesn't
• No property-count cap — conventional stops at 10 financed properties; DSCR doesn't
• Short-term rentals — many programs count Airbnb/VRBO income
• Speed — less documentation means faster underwriting

Typical requirements

• 20–25% down on purchases; cash-out refis available
• Credit score around 660+ (pricing improves with score)
• DSCR of 1.0+ preferred (sub-1.0 options exist with larger down payments)
• 1–4 unit residential investment properties; LLC vesting allowed

Straight answers to common questions

What counts as rent?

An executed lease or the appraiser's market rent analysis (Form 1007). Many programs also accept documented short-term rental revenue.

Are DSCR rates higher than a regular mortgage?

Yes, investor pricing runs above owner-occupied conventional. The current DSCR rate is on the live rate sheet every morning, so you can underwrite with real numbers.

Can I do this on my first rental?

Most programs want you to own a primary home or have some landlord history, but first-time investor options exist — ask.

Which states?

California, Oregon, Nevada, Arizona, Colorado, Idaho, Florida, Texas, and Tennessee.