Connect with us
Type something to search...
to navigateto selectESC to close

DSCR

DSCR

The DSCR Loan Program (Debt Service Coverage Ratio) is a type of investment property loan that qualifies borrowers based primarily on the income generated by the property itself—not the borrower’s personal income. It’s designed for real estate investors who want to finance rental properties without needing to show W-2s, pay stubs, or tax returns.

Instead of using traditional income documentation, the lender focuses on whether the property generates enough rental income to cover the mortgage payments, including principal, interest, taxes, insurance, and association fees (if any). This is calculated using the Debt Service Coverage Ratio (DSCR).

Why choose a DSCR Loan

  • Flexible Qualification Requirements: No traditional income documentation - skip tax returns, pay stubs, and W-2 forms.

  • AirDNA Data Qualification: Qualify based on short-term rental performance data instead of personal income.

  • Competitive Loan Terms: Access attractive interest rates with 75% - 85% loan-to-value ratios

  • Multiple Payment Options: Choose from 30-year, 40-year, or interest-only payment structures

  • Flexible Ownership Structure: Close in your personal name or under an LLC for maximum flexibility

  • Short-term Rental Focus: Designed specifically for Airbnb and vacation rental investment properties

  • Perfect for Savvy Investors: Built for experienced real estate investors looking to scale their portfolios.

How DSCR Loans Work

  • The Debt Service Coverage Ratio (DSCR) measures the property’s net operating income (NOI) divided by its debt payments.

  • Lenders use the DSCR to assess whether the property generates enough income to cover the mortgage.

  • Typically, a DSCR of 1.0 or higher means the property’s income fully covers debt obligations; lenders often require a minimum DSCR (e.g., 1.20).

  • Loan qualification focuses primarily on the property’s income, rather than the borrower’s personal income or credit score.

  • Borrowers make regular monthly payments on the loan, which is structured like a conventional mortgage but backed by the property’s cash flow.