The loan is based on the Debt Service Coverage Ratio (DSCR), which is a measure of how much the property’s cash flow can cover the loan’s debt payments. Essentially, it’s a loan that qualifies you based on your rental property’s income, rather than your personal income or employment history.

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DSCR Loan Requirements

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DSCR loans are primarily focused on the property’s ability to generate rental income, with typical requirements including:

• DSCR Ratio: Lenders usually require a DSCR of at least 1.25 or higher, meaning the property must generate 25% more income than the loan’s monthly payments (including principal, interest, taxes, and insurance).  A lower DSCR is accepted but will carry a higher rate.  

• Credit Score: A minimum credit score of 620 to 680 is generally needed for a DSCR loan, though this varies by lender.

• Down Payment: Expect a down payment of 20% to 25% for a DSCR loan, though some lenders may offer lower down payments for highly profitable properties.

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DSCR Loan Benefits

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• No Personal Income Verification: DSCR loans allow you to qualify based on the property’s cash flow, not your personal income, making it easier for investors to secure financing.

• Grow Your Portfolio: This loan type enables investors to finance multiple properties without impacting their personal debt-to-income ratio.

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The Bottom Line on DSCR Loans

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DSCR loans are ideal for real estate investors looking to finance rental properties without the need to verify personal income. If you’re an investor wanting to scale your portfolio, contact us today to learn how a DSCR loan can support your growth.