DSCR Investment Property Loans

A DSCR loan (Debt Service Coverage Ratio loan) is an investment property loan that qualifies borrowers based on the rental income the property generates, rather than the borrower's personal income. The DSCR is calculated by dividing the property's monthly rental income by the monthly mortgage payment. If the rental income is $2,500 and the mortgage payment is $2,000, the DSCR is 1.25. Most lenders require a minimum DSCR of 1.0 to 1.25 for approval. This makes DSCR loans perfect for real estate investors who want to finance rental properties without providing W-2s, tax returns, or personal income verification.

No! That's one of the biggest advantages of DSCR loans for investment properties. You do NOT need to provide personal tax returns, W-2s, pay stubs, or personal income verification. The loan approval is based solely on the rental income the property generates and its ability to cover the mortgage payment. This makes DSCR financing ideal for self-employed investors, business owners, real estate professionals, and investors purchasing properties through LLCs or other entities.

DSCR investment property loans can be used for various types of rental properties including: single-family homes, condos, townhomes, multi-family properties (2-4 units like duplexes and triplexes), and vacation rentals. The property must be used as an investment property that generates rental income - DSCR loans cannot be used for primary residences. Both existing rental properties with current tenants and properties that will be rented after purchase can qualify.

Most DSCR loans for investment properties require a minimum down payment of 20-25% of the purchase price. For example, if you're buying a $400,000 rental property, you'd need a down payment of $80,000-$100,000. The exact down payment requirement depends on factors like your credit score, the property's DSCR, and the lender's specific requirements. In some cases, experienced investors with strong cash flow properties may qualify for lower down payments.

Absolutely! DSCR investment loans are perfect for real estate investors looking to expand their rental property portfolio. Unlike conventional mortgages that limit the number of financed properties (typically 10), DSCR loans have no limit on the number of investment properties you can finance. Whether you own 5, 10, or 50 rental properties, you can continue to get DSCR financing for additional properties as long as each property has sufficient rental income to cover its mortgage payment.

Yes! DSCR loans can be used for short-term vacation rental properties including Airbnb, VRBO, and other short-term rental investments. The lender will evaluate the property's rental income potential based on market rental rates or actual rental history. If you're purchasing a vacation rental, the lender may use a rent survey or appraisal to estimate the property's rental income. The property must generate enough rental income to meet the minimum DSCR requirements, typically 1.0 to 1.25.

Most lenders require a minimum credit score of 620-680 for DSCR investment loans, though higher credit scores (700+) typically result in better interest rates and terms. While personal income isn't verified, lenders do review your credit history and credit score as part of the approval process. Having a strong credit score demonstrates financial responsibility and improves your chances of approval for investment property financing.

Yes! DSCR loans allow you to purchase and hold investment properties in an LLC, trust, or other business entity. This is a major advantage for real estate investors who want liability protection and tax benefits associated with entity ownership. Many conventional mortgages require personal ownership, but DSCR financing is designed to accommodate business entities, making it ideal for professional real estate investors building a rental property portfolio.