How a DSCR loan works
DSCR stands for debt service coverage ratio: the property's net operating income divided by its annual mortgage payment. If a property earns $120,000 a year and the loan payment is $100,000, the DSCR is 1.20x. Lenders set a minimum and size the loan to fit it. Your personal income isn't the deciding factor.
Run your own numbers with the DSCR calculator.
Who uses DSCR loans
- Investors with many properties whose tax returns show heavy depreciation
- Self-employed borrowers with variable income
- Buyers closing in an LLC
- Owners of small multifamily, mixed use and small commercial properties
DSCR loan or bank loan?
Banks may offer lower rates if your income and tax returns qualify easily. DSCR loans trade a somewhat higher rate for simpler documentation and more flexibility. We'll quote both when it makes sense.
Terms shown are typical market ranges across our lender network, not a commitment. Your actual terms come in writing after we review your deal.
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Frequently asked questions
What DSCR do I need to qualify?
Many lenders want 1.20x to 1.25x. Some go to 1.00x, and a few allow less with lower leverage or a higher rate.
Do DSCR loans require tax returns?
Usually not for income. Lenders still review credit, assets, the property's leases and operating history, and your real estate experience.
Can I use a DSCR loan for a cash-out refinance?
Yes. DSCR lenders offer purchase, rate-and-term and cash-out refinance loans.
What properties qualify?
Rental properties, small multifamily, mixed use and many small commercial buildings. Owner-occupied properties don't qualify.