DSCR Loans: A Guide for Real Estate Investors

The complete guide to how DSCR loans work, who they’re for, and how to apply as a real estate investor.

What Is a DSCR Loan?

As you may have noticed in the title, DSCR stands for Debt Service Coverage Ratio. This fancy financial language basically means that the loan is based on the income generated by the property, rather than being based on your personal income, W2s, or tax returns.

When you’re applying for a DSCR loan, instead of focusing on how much money you make, lenders look at how much money the property is generating, or would generate if rented — and whether it’s enough to cover the loan payment. This makes DSCR loans ideal for real estate investors, especially those who:

• Are self-employed

• Write off a lot of income on taxes

• Own multiple properties

• Want a fast and simple approval process

Who Can Benefit from a DSCR Loan?

DSCR loans are designed for real estate investors who want to qualify based on the income of the property, not their personal income.

You might benefit from a DSCR loan if you:

• Are self-employed or don’t have traditional income documentation

• Own multiple investment properties and want to expand your portfolio

• Use strategies like BRRRR, long-term rentals, or short-term rentals (Airbnb)

• Want to avoid submitting tax returns, W-2s, or pay stubs

• Prefer a faster, simpler approval process focused on the property’s cash flow

These loans are commonly used for:

• Single-family rentals

• Multifamily properties (up to 4 units)

• Short-term rentals and vacation properties

• Refinance or cash-out of existing rental properties

If the property cash flows, you may qualify — even if your personal income is hard to document.

DSCR Loan Pros and Cons

Like any type of financing, DSCR loans come with both advantages and trade-offs. Understanding both sides will help you decide if it’s the right choice for your investment strategy.

Pros

✅ No personal income verification required

You don’t need to provide tax returns, pay stubs, or W-2s. Your approval is based on the property’s cash flow, not your personal income.

✅ Faster approval process

Since less paperwork is required, DSCR loans often close more quickly than traditional loans.

✅ Ideal for self-employed investors

If you run your own business or write off a lot on your taxes, DSCR loans offer a practical path to financing.

✅ Works for short-term rentals and long-term rentals

Whether you’re investing in Airbnb properties or traditional rentals, DSCR loans can apply.

✅ No limit on number of properties

Unlike conventional loans that cap your property count, DSCR lenders often allow unlimited properties.

Cons

❌ Interest rates may be slightly higher than conventional loans

Because the lender is taking on more risk by not using your personal income, rates may be slightly higher. However, most investors find that the speed and flexibility of DSCR loans outweighs the negligible difference in interest rate.

❌ Larger down payments required

Most DSCR loans require at least 20–25% down. However, some lenders may allow less with strong cash flow.

❌ Only for investment properties

You can’t use a DSCR loan for your primary residence. It’s strictly for income-generating properties.

❌ Stricter property income requirements

If the property doesn’t cash flow enough to cover the debt (typically DSCR 1.0+), you may not qualify. However, there are other financing options that can still help you finance the property.

How Does a DSCR Loan Work?

Since a DSCR loan is approved based on the income generated by the property, lenders calculate something called the Debt Service Coverage Ratio (DSCR). This is a simple formula that compares the property’s monthly income to its monthly expenses:

DSCR Formula

DSCR = Monthly Rental Income ÷ Monthly Loan Payment

For example, if a property generates $2,000/month in rent and your estimated monthly mortgage payment is $1,600, your DSCR is:

2,000 ÷ 1,600 = 1.25

What Is a Good DSCR?

A DSCR of 1.0 or higher usually means the property is generating enough income to cover the loan. Most lenders look for a DSCR of 1.0 to 1.25, depending on the loan amount, property type, and market.

If the property cash flows well, you may qualify — even if your tax returns show low income or you’re self-employed.

DSCR Loan Requirements & Eligibility

DSCR loans have fewer personal requirements than traditional mortgages, but lenders still look at a few key factors to make sure the deal makes sense. Here’s what you typically need to qualify:

Credit Score

Most lenders require a credit score of at least 620–680. Higher scores may help you get better rates or lower down payment requirements.

Down Payment

You’ll usually need to put down 20–25%. Some lenders may allow as little as 15% with strong cash flow or credit.

DSCR Minimum

Most lenders want a DSCR of 1.0 or higher, meaning the property’s income covers at least 100% of the loan payment. Some may accept slightly lower DSCRs with additional reserves or higher credit.

Eligible Property Types

DSCR loans are available for:

Single-family homes
2–4 unit multifamily properties
Short-term rentals (like Airbnb/VRBO)
Long-term rentals

No Personal Income Documents Required

You don’t need to submit tax returns, W-2s, or pay stubs. Approval is based entirely on the property’s ability to cover its own expenses.

Frequently Asked Questions About DSCR Loans

Can a DSCR loan be owner occupied?

No, you usually cannot get a DSCR loan on a property that you live in, i.e. an owner occupied property.

Can a DSCR loan be refinanced?

Yes, DSCR loans can be refinanced.

Many real estate investors use DSCR refinancing to:
• Lower their interest rate
• Pull out equity through a cash-out refinance
• Switch to a longer or shorter loan term

As long as the property still meets the minimum DSCR requirement, refinancing is typically straightforward and doesn’t require tax returns or W-2s — just like the original loan.

How does a DSCR loan work?

A DSCR loan works by focusing on the income generated by the property, not your personal income. Lenders calculate something called the Debt Service Coverage Ratio (DSCR) by dividing the property’s monthly income by its monthly loan payment.

If the property generates enough income to cover the loan (usually a DSCR of 1.0 or higher), you may qualify — even if you’re self-employed or don’t have traditional income documentation.

Why get a DSCR loan?

DSCR loans are ideal for real estate investors who want a faster, simpler way to get approved without personal income verification. You don’t need tax returns, W-2s, or a job history — just a property that cash flows well.

They’re especially useful if you:
• Own multiple properties
• Are self-employed
• Invest in short-term or long-term rentals
• Want to expand your portfolio without hitting limits set by traditional lenders

What is the minimum DSCR to qualify?

Most lenders require a DSCR of 1.0 to 1.25, meaning the property’s income must cover 100–125% of the monthly loan payment. Some lenders allow lower ratios if you have strong credit or additional reserves.

Do I need an LLC to get a DSCR loan?

No, but it can help.
You don’t need an LLC to qualify, but many investors choose to borrow through an LLC for liability protection and tax reasons. Some lenders may even prefer or require it for certain property types.

Can I use a DSCR loan for AirBNB?

Yes, many lenders allow short-term rentals like Airbnb or VRBO.
You may need to show historical or projected rental income. Some lenders may average the past 12 months of bookings, while others may use market rental data.

What types of properties are eligible for a DSCR loan?

Most DSCR loans can be used for:
• Single-family rental homes
• 2–4 unit multifamily properties
• Condos and townhomes (in some cases)
• Short-term rentals
• Cash-out refinances on existing investment properties

Why Choose Us for Your DSCR Loan

Reason #1 is because we understand your aspirations, goals, and struggles. As real estate investors ourselves, we built this company from the ground up to provide a superior borrowing experience for real estate investors like you.

Trusted by Experienced Investors Nationwide

We’ve funded over 500 real estate deals across 45 states — and counting. Whether you’re flipping your first property or managing a growing portfolio, our clients stick with us because we deliver.

Lightning-Fast, Reliable Funding

We close in days, not weeks. Our process is streamlined, transparent, and designed for speed — without cutting corners or communication.

Flexible Funding Built Around Your Strategy

No two deals are alike. We work with you to structure loans that support your goals, not limit them — whether you’re flipping, holding, or building long-term cash flow.

Communication That Sets Us Apart

We respond fast, explain clearly, and never leave you guessing. Our clients say they come for the rates, but stay for the responsiveness.

A Real Relationship, Not Just a Transaction

We’re in it with you — deal after deal. Our goal isn’t just to fund your next property. It’s to help you scale smarter and faster.

Where We Offer DSCR Loans

We serve real estate investors in all 50 states. Below are detailed pages for key markets — and we’re adding more all the time.

Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky

Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota

Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming