The Basics
What every agent needs to know about DSCR loans
What is a DSCR loan?
A DSCR (Debt Service Coverage Ratio) loan is a non-QM investment property loan that qualifies based on the property's rental income — not the borrower's personal income, tax returns, or employment. If the property produces enough rent to cover its mortgage payment, the investor can qualify. No W-2s. No tax returns. No personal DTI calculation.
Why does this matter for your buyers?
Many investors — self-employed borrowers, business owners, people with lots of write-offs — can't qualify for a conventional investment loan because their tax returns don't reflect their real income. DSCR sidesteps that entirely. The question isn't "what do you make?" It's "what does the property make?" That opens the door for a lot of buyers who thought they were stuck.
Who is this for?
DSCR loans are ideal for: Self-employed investors with complex income, portfolio investors who've maxed conventional limits, first-time investors with strong assets but messy tax returns, anyone buying a long-term or short-term rental property. If your buyer is asking about investment properties — ask about DSCR first.
What makes it different?
Traditional investment loans look at personal income. DSCR looks at property income. Investors can close in an LLC for liability protection. Interest-only options are available to maximize cash flow. No limit on number of financed properties in most cases. Faster, less documentation, built for investors who move quickly.
The DSCR Formula
Monthly Gross Rent
Monthly PITIA Payment
=
DSCR Ratio
PITIA = Principal + Interest + Taxes + Insurance + HOA (if applicable). A ratio of 1.0 means rent exactly covers the payment. Higher is better. Most programs require 1.0 minimum.
📊 What Your DSCR Ratio Means
DSCR
What it means
Lender view
1.25+
Rent covers payment by 25% or more — strong cash flow
Best pricing
1.10–1.24
Good cash flow — rent comfortably covers the mortgage
Strong approval
1.00–1.09
Rent just covers the payment — minimum for most programs
Qualifies — tighter
0.75–0.99
Rent doesn't fully cover payment — some programs allow this
Limited options
Below 0.75
Significant shortfall — property doesn't support the debt
Most programs: No
The Calculator
Run the numbers on your investor's property
DSCR Calculator
Enter the property details to see the DSCR ratio and whether it qualifies
DSCR loans typically require 20–25% down minimum
DSCR rates run ~0.5–1.5% higher than conventional
Use current lease or market rent from appraisal (1007 form)
📊
Enter the property details
and hit Calculate to see
the DSCR ratio.
and hit Calculate to see
the DSCR ratio.
Quick Reference — 1-4 Unit Properties
Typical DSCR eligibility guidelines
Min Credit Score
620 – 700+
Higher scores = better LTV and pricing. 700+ for best terms. 620 min on most programs.
Min DSCR
1.0 (some 0.75)
Most programs require DSCR ≥ 1.0. Some allow 0.75–0.99 with compensating factors.
Max LTV (Purchase)
Up to 80%
760+ FICO can go to 85% on some programs. Most allow 75-80% at standard credit.
Loan Amounts
$100K – $3M+
Most programs start at $100K-$125K minimum. Jumbo DSCR available up to $3M+.
Property Types
SFR, 2-4 Units
Single family, condos (warrantable & non-warrantable), 2-4 unit. 5-8 units available separately.
Who Can Borrow
LLC or Personal
Borrowers can close in an LLC, corporation, or personal name. Great for investors focused on liability protection.
⚠️ Important: These are general guidelines based on commonly available DSCR programs. Actual terms, rates, and eligibility vary by lender, property type, loan amount, and borrower profile. Call Angie at 336-408-9531 to run a specific scenario — it takes 10 minutes.
Questions to Ask Your Investor Clients
When an investor buyer calls, lead with these questions. They immediately shift the conversation into DSCR territory and signal that you know your stuff.
On the property
"What's the projected monthly rent on this property? Is it currently leased or are we working off market rent?"
On their income situation
"Are you self-employed or do you have a lot of write-offs on your tax returns? Because there's a loan program that doesn't need any of that — it just looks at whether the rent covers the payment."
On their entity
"Are you planning to buy in your personal name or in an LLC? My lender can do it either way — just want to make sure we structure it right from the start."
On their timeline
"One of the advantages of this loan type is it moves faster — less documentation than a conventional investment loan. How quickly are you looking to close?"
The handoff to Angie
"Let me connect you with my lender — she can run the DSCR numbers in about 10 minutes and tell you exactly what you qualify for. No obligation, just real numbers."
Common Questions
What agents ask about DSCR loans
What if the property doesn't have a tenant yet? ▾
Most DSCR programs allow market rent from an appraisal (1007 rent schedule) instead of requiring an active lease. This means your investor can purchase a vacant property and qualify based on what the property should rent for — not what it's currently renting for. This is a huge advantage for fix-and-rent strategies.
Can investors use DSCR for short-term rentals like Airbnb or VRBO? ▾
Yes — many programs allow short-term rental income. For purchases, the 1007 rent schedule reflecting short-term rental income is used. For refinances, lenders can use 12 months of documented rental history from the platform. Minimum FICO is typically 700 for short-term rental DSCR and requires DSCR ≥ 1.0. Call Angie to confirm which programs fit your investor's specific property.
What if the DSCR is below 1.0? ▾
Some programs allow DSCR as low as 0.75 with compensating factors — typically a higher down payment (25-30%), stronger credit (720+), and more reserves. The pricing won't be as good, but it's not automatically a no. If your investor's deal is close, call Angie and let her shop it.
Can a first-time investor use a DSCR loan? ▾
Yes on most programs, but with some restrictions. First-time investors typically need a minimum FICO of 660-680, must have a primary housing history (can't be living rent-free), and some programs limit loan amounts to $1.5M. The key requirement is 12 months of housing history. If your buyer owns their home and is buying their first investment property — they're generally eligible.
Are there prepayment penalties? ▾
Yes — most DSCR programs have prepayment penalties, typically 5% of the loan balance in year 1, stepping down over 3-5 years. This is important to discuss with your investor upfront. If they plan to flip the property or refinance quickly, we need to structure the loan with that in mind. There are options — call Angie to talk through the right structure for their hold strategy.
Can investors close in an LLC? ▾
Yes — most DSCR programs allow closing in an LLC or corporation, which is one of the biggest advantages for serious investors focused on liability protection and portfolio scaling. The borrower still signs a personal guarantee on most programs. This is a great conversation to have with your investor clients who are building out their portfolio structure.
How fast can DSCR loans close? ▾
Faster than conventional investment loans in most cases — typically 21-30 days with a clean file. Because there's no income verification, employment verification, or personal DTI calculation, there's less back-and-forth with underwriting. For your investor clients who need to move quickly on a deal, this is a significant advantage over conventional financing.
Have an investor client?
Let's run the real numbers.
Give me the property address, the projected rent, and the purchase price — I'll have DSCR numbers back to you in 10 minutes. No obligation, no paperwork. Just answers so you can have a real conversation with your buyer.
DSCR calculator results are estimates for educational purposes only. Actual qualification, rates, and terms depend on lender guidelines, property type, borrower credit profile, and market conditions. Programs referenced are based on currently available wholesale DSCR products and are subject to change without notice. Not available in all states. Contact Angie Wilmoth · Glory Mortgage · NMLS# 2617463 · 336-408-9531 for a personalized scenario.