A DSCR loan—short for Debt Service Coverage Ratio loan—is a type of real estate investment financing that focuses on the cash flow of the property, not your personal income. This means you can qualify based on how much rental income the property generates, rather than providing traditional income documentation like W-2s or tax returns.
If you're a real estate investor looking for flexible, fast approval without the paperwork hassle, a DSCR loan could be the perfect fit.
DSCR is a simple formula that tells lenders whether the rental property can pay for its own mortgage:
DSCR = Rental Income ÷ Monthly Mortgage Payment (PITI)
(PITI = Principal, Interest, Taxes, Insurance)
If a property earns $2,000/month in rent and the monthly mortgage payment is $1,500:
This means the property generates 33% more income than needed to cover the mortgage—a strong indicator of positive cash flow.
✅ No Income Verification – No tax returns, pay stubs, or employment history required
✅ Based on Property Cash Flow – Your ability to repay is based on rental income
✅ Ideal for Self-Employed Investors – Simplifies financing for business owners
✅ Works for Short-Term or Long-Term Rentals – Airbnb, VRBO, and traditional leases
✅ Fast Closings – Less paperwork means quicker approvals
| Requirement | Typical Guideline |
|---|---|
| Minimum DSCR Ratio | 1.00 (some allow 0.75) |
| Down Payment | 20%–25% |
| Credit Score | 620+ |
| Property Types | 1–4 units, condos, multifamily, short-term rentals |
| Loan Purpose | Investment properties only |
DSCR loans are perfect if:
If the property pays for itself, you can likely qualify—it's that simple.