A DSCR (Debt Service Coverage Ratio) loan is a mortgage for real estate investors that qualifies the property, not the borrower. Instead of tax returns, W-2s, or pay stubs, lenders compare the property's rental income to its monthly PITIA payment. If the ratio is 1.0 or higher, the property pays for itself and typically qualifies.

How do you qualify for a DSCR loan?

Most DSCR programs require a minimum credit score of 620–680, a 20–25% down payment, and a DSCR of 1.0 or higher. Some lenders allow ratios as low as 0.75 with pricing adjustments. No employment or income documentation is required — the property's market rent (via a 1007 rent schedule) drives approval.

What is a good DSCR ratio for a rental property?

A DSCR of 1.25 or higher is considered strong and unlocks the best pricing. 1.0 means the property breaks even. Below 1.0 the rent doesn't fully cover the mortgage payment — still financeable through many DSCR programs, but expect a higher rate and larger down payment.

DSCR Loans Explained — Investor Financing

Q: Can I close a DSCR loan in an LLC?

Yes. DSCR loans are business-purpose loans and routinely close in an LLC or other entity name, which is a major advantage over conventional financing for real estate investors building a portfolio.

What is a DSCR loan?

A DSCR loan is a business-purpose investment property mortgage that qualifies the property instead of the borrower. Lenders divide the property's monthly rental income by its monthly PITIA payment (Principal, Interest, Taxes, Insurance, and any Association dues). That number is the Debt Service Coverage Ratio.

The DSCR formula

DSCR = Monthly Rent ÷ Monthly PITIA

Example: $2,500 rent ÷ $2,000 PITIA = 1.25 DSCR — strong, and typically unlocks the best pricing.

Because DSCR loans are underwritten to the asset — not the borrower's personal income — self-employed investors, portfolio landlords, and buyers with complex tax returns can finance deals a conventional lender would decline.

DSCR loan requirements at a glance

Minimum credit score

620 typical, 680+ for best pricing

Down payment

20–25% (higher for cash-out or lower DSCR)

DSCR ratio

1.0+ standard · 0.75 available with adjustments

Loan amounts

$100K to $3M+ (jumbo DSCR available)

Property types

SFR, 2–4 unit, condo, townhome, 5–10 unit

Occupancy

Investment only — no primary residence

Documentation

No W-2s, no tax returns, no pay stubs

Vesting

Personal name or LLC

Reserves

Typically 3–6 months PITIA

Prepayment

Buy-down options: 5/4/3/2/1, 3-year, or none

How to qualify for a DSCR loan

1
Property under contract or identified
DSCR loans are property-first. You'll need an executed purchase agreement or a property you already own for refi/cash-out.
2
Appraisal with a 1007 rent schedule
The appraiser provides market rent. Short-term rental deals can qualify off an AirDNA projection or your own STR income history.
3
Credit check + entity docs
Soft or hard pull depending on the lender. If closing in an LLC, we'll need your operating agreement and EIN.
4
Reserves and down payment sourcing
Bank statements showing seasoned funds. Business accounts, gift funds from a partner LLC, and 1031 proceeds all work.
5
Underwriting to the ratio
Rent ÷ PITIA = DSCR. That number, plus credit and LTV, drives your rate and terms.
6
Close in 21–30 days
Faster than most conventional investment loans because there's no income documentation to underwrite.

Advantages

Why investors choose DSCR

No personal income documentation
Close in an LLC
Unlimited number of financed properties
Short-term rental (Airbnb) income accepted
Cash-out refinance to scale the portfolio
Faster close than conventional investment loans

Trade-offs

What to weigh

Rates run 0.75%–1.5% above owner-occupied conventional
Larger down payment than a primary residence loan
Prepayment penalties are common (buy-outs available)
Investment-only — no house-hacking a DSCR loan

Frequently asked questions

What is a good DSCR ratio?

1.25 or higher is considered strong and prices best. 1.0 means the property breaks even. Below 1.0 is still financeable with many programs, at a higher rate and larger down payment.

Can I use a DSCR loan for an Airbnb or short-term rental?

Yes. Many DSCR lenders qualify short-term rentals using a 12-month AirDNA projection or your own STR income history rather than long-term market rent from the 1007.

Can I close a DSCR loan in an LLC?

Yes — DSCR loans are business-purpose and routinely close in an LLC. Bring your operating agreement and EIN and we'll title the property in the entity at close.

How many DSCR loans can I have?

There is no cap on the number of financed properties, unlike Fannie Mae's 10-property limit on conventional investment loans.

Do DSCR loans require a prepayment penalty?

Most do — typically a 5-year step-down (5/4/3/2/1). You can buy the penalty down or eliminate it entirely for a small rate adjustment.

Can I do a cash-out refinance with a DSCR loan?

Yes. Cash-out DSCR refinances up to 75% LTV are standard and are the most common way investors pull equity to fund the next acquisition.

Ready to close?

Get a DSCR quote from Anthony Brikho.

Chief Sales Officer at Bolt Home Loans. 7+ years lending experience built at Rocket Mortgage and United Wholesale Mortgage. Real strategy for real estate investors — from first door to hundred-door portfolios.

Securely Apply Online Call 248-881-8678

DSCR Loans: The Complete Guide for Real Estate Investors