DSCR Investment Property Loans
Investment Properties
DSCR Investment Property Loans
DSCR loans evaluate the rental income potential of an investment property — not your personal income — to determine qualification. Designed for real estate investors purchasing or refinancing eligible rental properties.
Who May Benefit
- Real estate investors purchasing rental properties
- Those refinancing existing investment properties
- Investors whose personal income does not reflect their investment capacity
- Borrowers building a rental property portfolio
- Those purchasing single-family, multi-unit, or eligible short-term rental properties
How It Generally Works
Debt Service Coverage Ratio (DSCR) is the relationship between a property's rental income and its debt obligations. A DSCR above 1.0 means the property generates more income than its debt costs. Lenders use this ratio to evaluate whether the property's cash flow supports the loan.
DSCR loans are not owner-occupied home loans. They are for purchasing or refinancing eligible rental investment properties. Credit, down payment, reserves, appraisal, and other program requirements still apply — approval is not guaranteed based on DSCR alone.
Key Considerations
Investment Properties Only
DSCR loans are for non-owner-occupied investment properties. They cannot be used for primary residences or second homes.
DSCR Calculation
DSCR is calculated by dividing the property's gross rental income by its total debt obligations (principal, interest, taxes, insurance, and HOA). A DSCR of 1.0 means income equals debt costs. Many programs require a minimum DSCR above 1.0.
Down Payment and Reserves
DSCR loans typically require a meaningful down payment and cash reserves. Requirements vary by lender and loan amount. Approval is not guaranteed based on DSCR alone.
Market Rent vs. Actual Rent
Lenders may use an appraisal-based market rent estimate or actual lease income to calculate DSCR. Properties with no lease history may use market rent from the appraisal.
DSCR loans are for investment properties only, not owner-occupied residences. Approval is not guaranteed. Program requirements, rates, and availability vary by lender and are subject to change.
Frequently Asked Questions
Investing in Rental Property?
Let's talk through your investment goals and how DSCR financing works.