DSCR Deep Dive
DSCR Loan Questions — Answered in Plain English
The questions investors ask before they apply. If yours isn’t here, call us.
What exactly is a DSCR ratio and what number do I need?
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DSCR stands for Debt Service Coverage Ratio. The formula is simple: monthly rental income ÷ monthly loan payment = DSCR. A $2,000/month rent on a property with a $1,500/month payment = 1.33x DSCR. We require a minimum of 1.20x for most programs, meaning the property needs to earn at least 20% more than the loan payment. Some programs allow 1.0x (break-even). No W-2s, no personal income — just the property math.
Can I buy an Airbnb or short-term rental with a DSCR loan?
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Yes — and this is where DSCR loans have a massive advantage. We accept short-term rental income using market rent data from platforms like AirDNA or comparable STR analysis. Most conventional lenders won’t count a single dollar of Airbnb income. We use it as the full basis for approval. The property needs to demonstrate it can cover the payment — and STR properties in Texas typically do so at 1.4x–1.8x DSCR in strong markets.
My LLC is the buyer. Can my LLC get a DSCR loan?
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Yes — LLC borrowing is not only allowed, it’s preferred. We routinely close DSCR loans to single-member LLCs, multi-member LLCs, and other entity structures. You’ll need to provide your articles of organization and operating agreement, but there’s no requirement to personally guarantee depending on the program. Holding investment property in an LLC is a smart liability play — we make sure that structure doesn’t prevent you from getting the loan.
I already own 12 investment properties. Will you still lend to me?
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Absolutely. There is no cap on the number of financed properties under a DSCR loan. Fannie Mae and Freddie Mac cap conventional mortgages at 10 properties. We don’t use Fannie/Freddie guidelines. Each DSCR loan stands on its own — we underwrite the property, not your portfolio size. Portfolio investors with 20+ properties are some of our best clients because they’ve proven they can operate rental properties and they understand the game.
What credit score do I need?
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Most DSCR programs require a minimum 620–640 FICO score from the primary borrower. Some programs go as low as 600 at higher rates. Unlike a conventional loan where a 740+ score dramatically changes your rate, DSCR rate variance from credit is smaller — the property’s income is doing most of the underwriting work. If you’re below 620, call us — there may be alternative programs depending on LTV and property type.
How do you handle a property that’s vacant or not yet rented?
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If the property is vacant, we use market rent analysis — a comparable rental survey for what a similar property in that area rents for. The appraiser provides a market rent schedule as part of the appraisal. We then use that number to calculate DSCR. This is how we fund new acquisitions before a tenant is in place. The key is that market rent must support a 1.20x DSCR at the loan amount requested.
Can I do a cash-out refinance with a DSCR loan?
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Yes. DSCR cash-out refinances are one of the most common uses of these loans — especially for the BRRRR strategy. You buy or rehab a property, get it rented, then refi to pull your equity back out. We can go up to 75–80% LTV on a DSCR cash-out refi depending on the property type and program. The DSCR at the new loan amount must still hit 1.20x+. Many investors use this to recycle capital across multiple properties without ever needing conventional financing.
Are DSCR loans available for commercial properties (not just residential)?
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DSCR as a concept applies to commercial properties too — that’s how commercial lenders have always underwritten. Our DSCR loan programs are primarily for residential investment properties (1–8 units) and small multifamily (up to 30 units). For larger commercial properties — retail, office, industrial, mixed-use — those fall under our commercial lending programs with similar income-based underwriting but different structures. Call us and we’ll point you to the right product.
I’m a foreign national. Can I get a DSCR loan in Texas?
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Yes. We have a dedicated foreign national DSCR program. You’ll need: a valid passport, ITIN (Individual Taxpayer Identification Number) or existing foreign credit report, proof of funds for down payment (typically 30–35% down), and a property that meets DSCR requirements. No U.S. credit history required. We close foreign national DSCR loans to investors from Mexico, Canada, the UK, and across Latin America. LLC structure is typically recommended for asset protection.
How long does it take to close a DSCR loan?
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Typically 14–21 business days from application to close — sometimes faster if appraisal is expedited. The main variables are appraisal turnaround (usually 7–10 days in Texas), title work, and how quickly you provide documents. We pre-underwrite in 24–48 hours and issue a term sheet fast. If you have a contract deadline, tell us on day one and we’ll work backwards from it. We’ve closed DSCR loans in 11 days when the deal required it.
