What Is a DSCR Loan?
A Debt Service Coverage Ratio (DSCR) loan is a type of real estate financing where lenders qualify borrowers based on the rental income of the property, not the borrower’s personal income. That means no W-2s, no tax returns, and no pay stubs required.
For real estate investors — especially those who are self-employed, retired, or who own multiple properties — DSCR loans are often the fastest and easiest path to financing.
How Is DSCR Calculated?
DSCR is calculated with a simple formula:
DSCR = Monthly Gross Rental Income ÷ Monthly Debt Obligation (PITIA)
PITIA stands for Principal, Interest, Taxes, Insurance, and Association dues (HOA).
- DSCR > 1.25 — Strong application, best rates
- DSCR = 1.0 — Cash-neutral, most lenders still approve
- DSCR < 1.0 — Property cash-flows negative; may still qualify with strong down payment
Who DSCR Loans Are For
- Self-employed investors with complex tax returns
- Buy-and-hold landlords with existing rental portfolios
- Investors adding their 6th, 10th, or 20th property (conventional lenders often cap at 10)
- Foreign nationals investing in U.S. real estate
- Short-term rental operators (Airbnb, VRBO)
DSCR Loan Terms at a Glance
- Property types: SFR, 2-4 unit, condos, vacation rentals, small multifamily
- LTV: Up to 80% purchase, up to 75% cash-out refinance
- Loan amounts: $100,000 – $5,000,000+
- Credit score: 620+ minimum (680+ for best pricing)
- Rate type: 30-year fixed, ARM, or interest-only options
- Income docs: None — lender uses lease or market rent
Ready to Apply?
We’ve been funding DSCR loans for real estate investors across Texas and nationwide since 1998. Get a free quote today — no hard credit pull, no obligation.
Learn more about our DSCR Loan program or start your application now.