Financing program

DSCR loans

A DSCR loan is an investment property loan that qualifies on the property's rental income, measured by the debt service coverage ratio, instead of on the borrower's personal income or tax returns.

DSCR stands for debt service coverage ratio: the property's income divided by its debt payments. If the rent covers the mortgage with enough cushion, the loan can qualify without W-2s or personal tax returns. That makes DSCR loans popular with self-employed investors and investors growing a rental portfolio.

What it is used for

Buying single-family, 2-4 unit and small multifamily rentals
Refinancing a rental, including cash-out
Refinancing out of a bridge or rehab loan once a property is rented
Financing short-term rentals with some lenders
Closing in an LLC

How it is typically structured

Qualification: Based on the property's rent relative to the full payment, including taxes, insurance and any HOA dues
Common DSCR minimum: Often around 1.0x to 1.25x, with some programs accepting lower ratios at higher pricing
Terms: Commonly 30 year fixed, with some adjustable and interest-only options
Prepayment: Most DSCR loans carry a prepayment penalty, often stepping down over three to five years

Terms vary by lender, property and borrower. This is general market information, not a quote or commitment.

What lenders look at

Market rent from the appraisal or the actual lease
Debt service coverage ratio
Credit score
Reserves after closing
Loan-to-value

What you will need

Leases for occupied units
Purchase contract or current mortgage statement
Bank statements showing down payment and reserves
Entity documents if closing in an LLC
Insurance quote

Your portal checklist is generated from your deal, so you are only asked for what your file needs.

How DealRail places it

DSCR pricing and guidelines vary widely from lender to lender. We compare the programs that fit your property, ratio and credit profile rather than sending you to a single lender's rate sheet.

Common questions

How is DSCR calculated on a rental property?

Divide the monthly rent by the full monthly payment, including principal, interest, taxes, insurance and HOA dues. Rent of $2,500 against a $2,000 payment is a DSCR of 1.25x.

Do DSCR loans require tax returns?

Generally no. DSCR loans qualify on the property's income, so personal tax returns and W-2s are usually not required. Lenders still review credit, assets and the property.

Can a DSCR loan be used for a primary residence?

No. DSCR loans are business-purpose loans for investment property only.