What Is a DSCR Loan?
A DSCR loan is a mortgage for real estate investors underwritten based on the property's income rather than the borrower's personal income. Ideal for self-employed investors or those wanting to qualify based on rental cash flow.
DSCR Loan Rates & Terms
DSCR rates: 6.5-9.5% (1-2% above conventional). Terms: typically 30-year fixed. Minimum DSCR: 1.00-1.25. Down payments: 20-30%. Loan amounts: $75,000-$5 million.
How Does a DSCR Loan Work?
Lender evaluates property income (DSCR = NOI ÷ Annual Debt Service). If rent covers the loan payment with cushion (≥1.00 or 1.25), you qualify. No personal tax returns or W-2s needed.
Key Features of Our DSCR Loan
Max Loan from NOI
Calculate max loan amount based on NOI and target DSCR
DSCR Sensitivity
See how rate/NOI changes affect DSCR
✅ Pros
- No personal income verification
- Ideal for self-employed investors
- Unlimited financed properties
- Faster closing than conventional
⚠️ Cons
- Higher rates than conventional
- Higher down payments
- Property must cash flow
- Prepayment penalties common
DSCR Loan vs Alternatives
DSCR Loan vs Conventional Investment Loan
Conventional verifies personal income and DTI with 2 years of tax returns. Rates are lower (5.5-7%) but qualification is harder. DSCR loans skip income verification.
DSCR Loan vs Hard Money Loan
Hard money is short-term (6-24 months), asset-based, with higher rates (10-15%). DSCR loans are long-term (30-year) rental property loans with lower rates.
How to Qualify for a DSCR Loan
Requirements: credit score 620+ (660+ for best rates), down payment 20-25%, DSCR ≥ 1.00-1.25, cash reserves (6-12 months payments). Close in an LLC. No personal tax returns needed.