What is a DSCR loan?
A DSCR loan qualifies the property, not you. Here's the formula, the thresholds lenders use, and what documents you actually need.
A DSCR loan is a business-purpose mortgage on investment property that is underwritten on the property's rent instead of your personal income. DSCR stands for Debt Service Coverage Ratio: gross monthly rent divided by the monthly PITIA payment — principal, interest, taxes, insurance and association dues.
If rent is $2,600 and PITIA is $2,000, your DSCR is 1.30. The property covers its own debt with 30% to spare.
Why investors use them
- No tax returns, W-2s, pay stubs or debt-to-income calculation
- Write-offs on your Schedule E don't work against you
- Title can be held in an LLC, LP or trust
- No cap on the number of financed properties on most programs
- Self-employment and irregular income are non-issues
The thresholds that matter
Most programs treat 1.00 as the floor, and pricing and leverage improve meaningfully at 1.25 and above. Some lenders allow coverage below 1.00 at reduced leverage. Because DSCR is computed on the actual payment, an interest-only structure often lifts a borderline deal into a better tier.
What you provide
- Property address, estimated value and current payoff
- The lease, or realistic market rent (the appraisal's 1007 rent schedule can supply it)
- Tax, insurance and HOA figures
- Entity documents if you close in an LLC
- Bank statements for reserves — not for income
What DSCR loans are not
They are not for owner-occupied homes, and they are not consumer mortgages. These are business-purpose loans, which is exactly why the underwriting looks nothing like a bank's. We originate refinances only: cash-out, rate-and-term, and hard money exits.
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Business-purpose loans for investment properties only. Not for owner-occupied properties. Not a commitment to lend.