DSCR Loans: Qualify Based on Rental Income, Not Personal Income

What is a DSCR Loan?

A DSCR loan is a type of investment property mortgage that evaluates a property’s ability to generate enough income to cover its own debt. Instead of reviewing the borrower’s personal income or employment history, lenders look at the property’s rental income and compare it to the monthly mortgage payment (including principal, interest, taxes, insurance, and HOA fees, if applicable). This ratio—known as the Debt Service Coverage Ratio—helps determine eligibility. A DSCR of 1.0 or higher typically indicates the property can cover its expenses. This makes DSCR loans a powerful option for self-employed investors, high-net-worth individuals, and anyone who relies on rental income rather than W-2 employment.

Key Features of DSCR Loans

• Qualification based on rental income, not personal income
• No tax returns or W-2s required in most cases
• Designed specifically for investment properties
• Works for short-term and long-term rental strategies
• Available for single-family, multi-family, and mixed-use properties
• Typically requires a larger down payment than conventional loans
• Can be used for purchase or refinance transactions
• Faster approval process than traditional investor loans
• DSCR ratios generally range from 0.75 to 1.25+ depending on the lender
• Often available to U.S. and foreign national investors

Types of DSCR Loan Programs

• Single-Family Rental DSCR Loans – For 1–4 unit residential rental properties
• Multi-Family DSCR Loans –For 5+ unit residential investment properties
• Short-Term Rental (Airbnb/VRBO) DSCR Loans – Based on projected or market rental income
• Cash-Out Refinance DSCR Loans –Allows investors to access built-up equity
• Portfolio DSCR Loans – Designed for investors with multiple properties