DSCR Loan

A DSCR loan is a rental-property loan program that qualifies borrowers based on the subject property's cash flow rather than personal income or employment, making it popular with real estate investors who don't fit conventional debt-to-income underwriting. Most DSCR loan programs require a minimum ratio of 1.0x to 1.25x, and are commonly used to finance single-family rentals and small (2–4 unit) multifamily properties.

DSCR loans grew rapidly as a non-QM (non-qualified mortgage) product category serving real estate investors whose personal income documentation doesn't map cleanly to conventional mortgage underwriting — self-employed borrowers, those with multiple properties whose depreciation losses suppress reported income, or investors buying through an LLC. Instead of verifying tax returns and employment, DSCR lenders qualify the loan purely on whether the property's actual or market rent covers the proposed payment.

Because the borrower's personal finances are largely out of scope, DSCR loan pricing sits above conventional owner-occupied rates and below hard money, and requirements vary widely by lender: minimum DSCR thresholds from 0.75x (higher rate, more scrutiny) up to 1.25x+ (best pricing), minimum credit scores typically 620–680+, and down payments usually 20–25%.

DSCR loans are widely discussed — and sometimes misunderstood — in real estate investor communities; a common point of confusion is that a sub-1.0x DSCR doesn't disqualify a borrower outright, it simply means the lender prices in more risk and may require larger reserves or a bigger down payment to compensate.

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