What is a DSCR loan?
A DSCR loan is a mortgage on an investment property that qualifies on the property's rental income instead of your personal income. No tax returns, no W-2s, no debt-to-income ratio. The lender is underwriting the asset.
The ratio itself
DSCR stands for debt service coverage ratio. It measures whether the property produces enough rent to cover its own mortgage payment:
DSCR = Gross Monthly Rent ÷ PITIA
PITIA = Principal + Interest + Taxes + Insurance + Association dues
That's the whole calculation. A property renting for $2,400 a month with a $2,000 PITIA has a DSCR of 1.20 — the rent covers the payment with 20% to spare.
Reading the number
| DSCR | What it means | Practical effect |
|---|---|---|
| 1.25+ | Rent exceeds the payment by 25% or more | The widest set of lenders will consider the file |
| 1.00 – 1.24 | Rent covers the payment | Within range for most DSCR programs; options narrow approaching 1.00 |
| Below 1.00 | Rent falls short of the payment | Fewer lenders and tighter terms — but programs do exist |
Thresholds vary by lender and change over time. Treat these as orientation, not as guidelines you can rely on.
Watch the denominator. Taxes and insurance are part of PITIA, and both have moved sharply in several states. A property that penciled at 1.15 on last year's insurance premium can land under 1.00 on this year's. Always run your DSCR on current numbers, not the ones from the listing.
DSCR calculator
Enter the property's own numbers, including a rate of your choosing, and see where the ratio lands. Everything calculates in your browser — nothing is sent to us.
Number not where you want it? Lowering the loan amount, extending the term, or moving to an interest-only structure all raise the ratio. We can walk through how those interact.
Four ways to move a DSCR
Lower the loan amount
The most direct lever. More down payment means a smaller payment, which lifts the ratio and usually moves you into a lower LTV band at the same time.
Interest-only structure
Removing principal from the payment can raise a DSCR substantially during the IO period. You're trading amortization for coverage, so it's worth being deliberate about it.
Longer amortization
A 40-year term spreads principal thinner than a 30. Modest effect compared to interest-only, but real, and it stacks with the other levers.
Buy down the rate
Points paid at closing reduce the interest portion of the payment. Whether that trade is worth making depends on how long you plan to hold — worth working through before you commit to a structure.
DSCR loan FAQ
Do I need to show tax returns or pay stubs?
No. That's the defining feature of the product. Qualification runs on the property's rent against its payment. Lenders still verify identity, credit, assets for reserves and down payment, and the property itself — but personal income documentation isn't part of it.
Can I close in an LLC?
Yes, and most investors do. Vesting in an entity is standard on DSCR programs rather than an exception that needs justifying. Lenders will want the operating agreement and articles, and typically a personal guaranty from the members.
How many properties can I finance?
There's no agency-style cap on financed properties, because there's no personal DTI calculation to blow through. Individual lenders may cap total exposure to one borrower, which is one of the reasons working across a panel matters as a portfolio grows.
What credit score do I need?
Requirements vary by lender and move with the market. Score tends to affect which lenders will consider a file and how much leverage they'll allow, rather than acting as a simple pass/fail. Tell us your range and we'll tell you what it opens up.
Is there a prepayment penalty?
Usually, yes — DSCR loans commonly carry a prepay term, often structured as a declining percentage over the first several years. Shorter or zero prepay is frequently available at a higher rate. If you might sell or refinance soon, say so early; it changes which program is right.
Will it work on a short-term rental?
Often. The question is which income figure the lender uses — long-term market rent from the appraiser, or documented STR revenue. Those can differ a lot in either direction, so identify the program before you're committed to a purchase price.
Can I get a DSCR loan on a vacant property?
Frequently yes, using the appraiser's market rent opinion in place of a lease. Some lenders reduce maximum LTV when the unit isn't leased, so it's a factor to price in rather than assume away.
What about condotels or non-warrantable condos?
Both are financeable. They narrow the field, so the sooner we know, the sooner we can point the file in the right direction — tell us at the start rather than at appraisal and it rarely becomes a problem.
Want us to check your scenario?
Address, rent, estimated value, and target loan amount is enough to get started.