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DSCR Loans

Last updated: October 2026

A DSCR (Debt Service Coverage Ratio) loan asks if the rent covers the payment. On most programs you are qualified on the property's rental income rather than your personal tax returns. That's why investors with big write-offs use it to keep buying.

Find your optionsCall (949) 990-6030

Do I qualify?

Key Facts

  • A DSCR loan is a mortgage for real estate investors that qualifies based on a rental property's income.
  • Randy Mathis, NMLS# 1516760, has access to 100+ lenders through Lumin Lending Inc. and arranges DSCR loans for 1-4 unit rentals.
  • A ratio of 1.0 or higher gets the strongest terms, credit scores start at 660 on most programs, purchase and cash-out financing go up to 75% LTV, and loan amounts run from $100,000 to $3,000,000, with fully amortizing options with no balloon payment on select programs; interest-only is available on select programs, and terms vary by program.
  • Purchase, rate-and-term, and cash-out refinance in all 15 states I'm licensed in (some local restrictions apply): AL, AZ, CA, CO, FL, ID, MD, MI, OR, PA, TN, TX, UT, VA, WA (licensing details).

What Is a DSCR Loan?

DSCR stands for Debt Service Coverage Ratio. It measures whether a rental's income covers its own mortgage payment, and investors use the same name for the loan built on that math. It skips most of the friction self-employed investors and portfolio landlords hit with conventional underwriting.

It's part of my broader Non-QM loan programs for investors and self-employed borrowers.

How Is DSCR Calculated?

You can run this yourself on any rental before you talk to a lender.

DSCR = Gross Monthly Rent ÷ Monthly PITIA

PITIA = Principal + Interest + Taxes + Insurance + Association dues (if applicable)

Worked Example: Redo the Math Yourself

Rent Collected

$1.20

for every dollar of PITIA

PITIA

$1.00

the full housing cost

DSCR

1.20

$1.20 ÷ $1.00

Read it out loud: “For every dollar this property costs to carry, it brings in a dollar twenty of rent.” A DSCR of 1.20 clears the 1.0 threshold with room to spare.

Illustrative ratio only, not an offer, rate quote, or commitment to lend. Actual PITIA varies by property, lender, and program. Rent comes from a signed lease or an appraiser's rent schedule (Form 1007 or equivalent).

DSCR > 1.0

Rent exceeds the payment. Generally the best pricing.

DSCR = 1.0

Rent exactly covers the payment. Qualifies for standard terms on most programs; some require more for top leverage.

DSCR < 1.0

Rent falls short of the payment. Select programs accept ratios from 0.75 to 0.99, and select no-ratio programs accept rent below 0.75, typically at up to 75% LTV on a purchase with 640 to 700+ credit.

Who Does a DSCR Loan Fit?

DSCR loans are business-purpose loans for non-owner-occupied property only. These are the investors I see most.

  • The self-employed investor. Write-offs shrink your taxable income. The rent qualifies the property instead.
  • The growing landlord. Conventional DTI limits or financed-property counts stopped working for you.
  • The first-time investor who already owns a home. First-time investors may qualify with tighter limits; first-time homebuyers are eligible only on select programs.
  • The BRRRR investor refinancing out. Cash-out goes up to 75% LTV for qualified borrowers, usually after about 6 months of ownership.
  • The short-term rental operator. Airbnb or VRBO income can count on select programs, with tighter terms.

DSCR is not for a home you live in. With strong, documented W-2 income, a conventional investment loan will usually cost less.

How Does Qualifying Work on a DSCR Loan?

  • The rent. On a purchase, the appraiser's rent schedule (Form 1007 on a single unit) sets market rent. On a refinance, lenders generally use the lower of the lease or the market estimate.
  • Your credit and cash. Your score sets your leverage, and you need the down payment, closing costs, and reserves in hand.
  • Your track record and title. Mortgage history, investor experience on some programs, and whether you vest personally or in an LLC.

On most programs the lender generally doesn't need your personal tax returns or employment verification.

DSCR Program Parameters

Minimum FICO and maximum loan-to-value (LTV) move together. These are representative figures across the 1-4 unit investor guidelines I work with.

ParameterWhat to expect
DSCR ratio1.0 or higher qualifies for the strongest terms. Select programs accept ratios from 0.75 to 0.99, and select no-ratio programs accept rent below 0.75, typically at up to 75% LTV on a purchase with 640 to 700+ credit.
Credit scoreFrom 660 on most programs; from 620 on select programs. Some programs focus on equity over credit. Varies by lender.
Max LTV, purchaseUp to 75%; higher on some programs for strong borrowers.
Max LTV, cash-out refinanceUp to 75% for qualified borrowers. Cash-out dollar limits vary by lender.
Loan purposePurchase, rate-and-term refinance, or cash-out refinance.
Loan size$100,000 to $3,000,000, with larger balances on select programs.
OccupancyNon-owner-occupied investment property only. Business-purpose loan.
Property typesSingle-family homes, condos, and 2-4 unit rentals. PUDs, condotels, and non-warrantable condos on select programs.
Short-term rentalsAirbnb/VRBO income can be used to qualify on select programs, with tighter terms.
ReservesCommonly 3 to 12 months of PITIA; more for larger loans and ratios below 1.0. Varies by lender.
TermsFully amortizing options with no balloon payment on select programs; interest-only is available on select programs. Terms vary by program.
PrepaymentTerms vary. Shorter-penalty and no-prepay options exist on select programs.
BorrowersFirst-time investors may qualify; first-time homebuyers are eligible only on select programs. Foreign national investors considered on select programs (ITIN on select investor programs). LLC vesting may be available.

Aggregated across multiple wholesale lenders as of October 2026; subject to change. Not an offer or commitment to lend.

What Property Types Qualify?

Single-Family Rental
Condo
2-4 Unit Multi-Family
PUD*
Non-Warrantable Condo*
Condotel*
Short-Term Rental (STR)*

*PUD, non-warrantable condo, condotel, and short-term rental financing is available on select programs and carries additional credit, LTV, or reserve requirements. Select DSCR programs cover 5 to 10 unit residential and 2 to 8 unit mixed-use properties (up to 75% LTV on a purchase, DSCR 1.0+); larger or fully commercial properties go through my commercial loan programs.

DSCR vs. Conventional Investment Property Loans

  • Qualifying income

    DSCR Loan:
    Property's rental income
    Conventional Investment Loan:
    Borrower's personal income (tax returns, W-2s)

  • Personal tax returns

    DSCR Loan:
    Not used to qualify on most programs
    Conventional Investment Loan:
    Yes, typically 2 years

  • Entity/LLC vesting

    DSCR Loan:
    May be available
    Conventional Investment Loan:
    Generally not allowed

  • Number of financed properties

    DSCR Loan:
    Varies by lender; some limit loans per borrower
    Conventional Investment Loan:
    Typically capped (e.g. 10 conventional financed properties)

  • Interest rates

    DSCR Loan:
    Higher (Non-QM pricing)
    Conventional Investment Loan:
    Lower (conforming pricing)

  • Prepayment penalty

    DSCR Loan:
    Common; terms vary, with shorter and no-prepay options on select programs
    Conventional Investment Loan:
    Rare

  • Foreign nationals

    DSCR Loan:
    Considered on select programs
    Conventional Investment Loan:
    Generally not eligible

  • Documentation

    DSCR Loan:
    Lighter: the property, your credit, your assets
    Conventional Investment Loan:
    Full personal income documentation

What to Expect, Start to Close

  1. Send me the deal. The property, price or value, rent, taxes, insurance, and any HOA dues. I run the ratio first.
  2. Match the program. Ratio, credit, property type, and hold period decide the lender and the prepayment terms.
  3. Gather the file. ID, asset statements, current leases, a schedule of real estate owned, and LLC documents if you vest in an entity.
  4. Appraisal with a rent schedule. This step changes the math most often, so I plan around a conservative rent number.
  5. Underwriting and closing. Conditions clear, you review final terms, and you close.

The Honest Trade-Offs

  • You pay for the flexibility. DSCR pricing runs higher than a conventional investment loan. Make sure the deal still cash-flows at DSCR cost.
  • More equity up front. Purchase financing goes up to 75% LTV on most programs, so plan on at least 25% down.
  • Prepayment penalties. Common on DSCR loans. Shorter-penalty and no-prepay options exist on select programs, usually at a cost, so match the penalty to your hold period.
  • You are still on the hook. Even in an LLC, expect a personal guarantee.

DSCR Loans by State

Local rent and short-term rental rules shift the math by state. State guides are rolling out across my 15 licensed states.

DSCR Loans in Arizona

Local market context, a worked example, and what's different in Arizona.

View Arizona DSCR guide

Not seeing your state? DSCR loans are available in all 15 states I'm licensed in (some local restrictions apply). Book a call and I'll walk you through your market.

Run Your Own DSCR Math

Model the payment with my calculators, then divide the rent by it.

Open Calculators

Frequently Asked Questions

What is a DSCR loan?
A DSCR (Debt Service Coverage Ratio) loan is a mortgage for real estate investors that qualifies on a rental property's cash flow instead of your personal income. On most programs, you are qualified on the property's rental income rather than your personal tax returns. It's a business-purpose loan for rental property, not a home you live in.
How is DSCR calculated?
Divide the gross monthly rent by the monthly PITIA (principal, interest, taxes, insurance, and association dues). On an interest-only loan, lenders generally run the ratio on the interest-only payment.
What credit score do I need for a DSCR loan?
Credit scores from 660 qualify on most DSCR programs, and some programs start at 620. Short-term rental programs typically need 700 on select programs. Interest-only options and credit minimums vary by lender. Tell me your score and I'll show you where it fits.
Can I get a DSCR loan if my property's DSCR is below 1.0?
Yes, on select programs. Select programs accept ratios from 0.75 to 0.99, and select no-ratio programs accept rent below 0.75, typically at up to 75% LTV on a purchase with 640 to 700+ credit. Expect lower leverage, more reserves, and tighter rules than at 1.0 or higher, like a larger minimum loan amount, lower LTV on condos and 2-4 units, and fewer options for first-time investors. A bigger down payment is often the simplest fix. It lowers the payment and raises the ratio. Varies by lender.
Do DSCR loans have prepayment penalties?
Many do. A common structure is a declining percentage over roughly 1 to 5 years. Prepayment terms vary, and shorter-penalty and no-prepay options exist on select programs. A shorter penalty usually costs more in rate or fees. A handful of states restrict or prohibit prepayment penalties on business-purpose loans, and lenders there typically adjust the rate or fees instead. Tell me your hold period up front.
Can foreign nationals get a DSCR loan?
On select programs, yes. Foreign national investors are considered on select DSCR programs, and ITIN investors on select investor programs. Maximum LTV is lower than a standard domestic loan, commonly 65% to 75% on a purchase. A U.S. bank account is a common requirement. Rules differ widely by lender, so I need your residency status, credit history, and the property first.
More questions (6)
Can I close a DSCR loan in an LLC?
Vesting in an LLC may be available. It's a big reason investors look at DSCR loans, since conventional loans generally don't allow it. Expect a personal guarantee, so an LLC doesn't make the loan non-recourse. The entity generally needs to be in good standing. I confirm entity rules with the lender before you form or retitle anything.
Can I use short-term rental (Airbnb/VRBO) income to qualify?
On select programs, yes. Short-term rental income can count, but expect tighter terms than a long-term rental. On one program I reviewed, that meant 700+ credit, a DSCR of at least 1.0, and a maximum LTV of 75% on a purchase and 70% on a refinance. A purchase typically relies on an appraiser's short-term rent schedule. A refinance typically needs a 12-month rental history from the platform or bank statements.
Are DSCR loan rates higher than conventional loans?
Generally, yes. Rates typically run higher than a conventional investment property loan because the lender qualifies the property, not your personal income. I quote rates personally once I have your full scenario, and I'll show you whether the deal still cash-flows at that cost.
Is there a minimum or maximum DSCR loan amount?
Loan amounts commonly run from $100,000 to $3,000,000, with larger balances on select programs for experienced investors. $100,000 is the conservative floor across my lender network. A few programs start lower, and some set a higher minimum when the DSCR is below 1.0. Select DSCR programs cover 5 to 10 unit residential and 2 to 8 unit mixed-use properties. Larger or fully commercial properties are a commercial request and are reviewed individually.
How many rental properties can I finance with DSCR loans?
There's no universal cap on financed properties across my lender network, but each lender sets its own limits. Some cap the loans to a single borrower (for example, a maximum of 10 loans or a combined dollar cap). Others limit financed-property counts per loan. I match you with a lender whose limits fit your portfolio as it grows.
How much do I have to put down on a DSCR loan?
Plan on at least 25% down on most DSCR purchases. Purchase financing goes up to 75% LTV through my lender network, and higher on some programs for strong borrowers with excellent credit, smaller loans, and a ratio of 1.0 or better. Larger loans, lower scores, condos, short-term rentals, and sub-1.0 ratios tend to lower the limit. Budget for closing costs and reserves, commonly 3 to 12 months of PITIA, on top of the down payment.

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Send Me Your Next Rental

Send me the property and the rent, and I'll tell you which DSCR program fits and what it will take.

Find your optionsBook a call

Or call (949) 990-6030

DSCR loans are business-purpose, Non-QM investment property loans, not available for a primary residence. Figures on this page are aggregated across multiple wholesale lenders as of October 2026, vary by lender, and are subject to change without notice. This page is not a rate quote, credit decision, or offer to lend.

Rates and program availability may vary based on the state or region in which the financed property is located. This is not a credit decision, an offer, or a commitment to lend. Program restrictions apply.

Randy Mathis NMLS# 1516760 | DRE# 02236644 | Lumin Lending Inc. NMLS# 2716106 | DRE# 02291443. Equal Housing Opportunity.