DSCR Investment Property Loans For Real Estate Investors
Why DSCR Loans Are Perfect for Real Estate Investors
No Income & No Tax Returns
Same Day Approvals & 7 Day Fundings
Flexible Terms for Short & Long-Term Rentals
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DSCR Purchase / DSCR Cash Out Refinance Options
Short / Long Term Rentals & Fix and Flips
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What is a DSCR Loan?
A DSCR loan (Debt Service Coverage Ratio loan) is a type of investment property mortgage that qualifies the borrower based on the property’s income—not personal income, W-2s, or tax returns. DSCR loans are commonly used by real estate investors, including self-employed borrowers, LLCs, and those scaling rental portfolios.
Lenders evaluate whether the property can cover its own expenses by calculating the Debt Service Coverage Ratio, which is:
DSCR = Gross Rental Income ÷ Monthly PITIA (Principal, Interest, Taxes, Insurance, Association dues)
If the ratio is 1.00 or higher, the property is considered to cover its own debt service.
What are the Features of a DSCR Loan?
No Personal Income Verification: No tax returns, W-2s, or pay stubs required. You qualify based on the property’s cash flow, not your personal finances. Perfect for self-employed borrowers or full-time investors.
Minimum DSCR Requirements: Most lenders require a DSCR of at least 1.00x, meaning the property generates enough income to cover the monthly mortgage payment. Some lenders require 1.10x – 1.25x, especially for lower credit scores or higher loan amounts.
Down Payment: Most DSCR lenders require a minimum 20–25% down payment. The exact amount can depend on your credit score, DSCR ratio, and property type.
Credit Score Requirements: Minimum credit score is usually 620 for refinances and 660 for purchase, but better rates and lower down payments are available for borrowers with 680+.
Loan Amounts and Limits: Loan amounts typically range from $100,000 to $2,000,000, with some lenders offering up to $5 million for experienced investors or portfolios.
Property Types Eligible: Single-family rentals (SFRs), 2–4 unit properties, Condos and townhomes, Short-term rentals (Airbnb/VRBO), Mixed-use properties (on a case-by-case basis)
Interest Rates: DSCR rates generally range from 7.25% to 9.99% as of 2025, depending on credit score, LTV, DSCR ratio, and property type.
Interest-only options are often available to maximize cash flow.
Loan Terms: 30-year fixed, 5, 7, or 10-year ARMs, Interest-only for 5 or 10 years available with many lenders
What are the Pro's and Con's of a DSCR Loan?
Benefits of a DSCR Loan:
No Income Docs Required: No tax returns, W-2s, or bank statements needed. You qualify based on the property, not your job or personal income.
Ideal for Self-Employed or LLC Investors: You can close in the name of an LLC or corporation and scale your portfolio without hitting DTI caps.
Use on Long-Term or Short-Term Rentals: DSCR loans are great for both traditional rentals and short-term vacation properties like Airbnb or VRBO.
Interest-Only Available: Maximize monthly cash flow with interest-only payments for 5 or 10 years before switching to fully amortized.
Fast Closing: With fewer documents required, DSCR loans often close in 15–25 business days—faster than conventional investment loans.
Drawbacks of a DSCR Loan:
Higher Interest Rates: Rates are typically 1–2% higher than conventional investment loans due to the lower documentation and investor risk.
Minimum DSCR Required: If the property doesn’t cash flow enough (e.g., DSCR < 1.00), you may need a bigger down payment or won’t qualify.
Larger Down Payment: Expect to put down at least 20%, with many lenders requiring 25–30% for short-term rentals or lower DSCRs.
Prepayment Penalty: Most loans include a 3–5 year penalty. If you plan to sell or refinance early, this can cost thousands.
Not for Primary Residences: DSCR loans are for investment properties only—not for homes you plan to live in.
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