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Frequently Asked Questions
What does DSCR stand for in real estate loans?
DSCR stands for Debt Service Coverage Ratio. It’s a measure used by lenders to determine whether a rental property's income can cover its mortgage and related expenses. A DSCR of 1.0 or higher typically qualifies.
Do I need to show tax returns or personal income for a DSCR loan?
No. One of the main advantages of a DSCR loan is that you do not need to provide personal income documentation, such as tax returns, pay stubs, or W-2s. Approval is based solely on the property’s rental income.
What is the minimum DSCR required to qualify?
Most lenders require a minimum DSCR of 1.0, meaning the property breaks even (rent = expenses). However, some lenders may accept a lower DSCR (as low as 0.75) with higher down payments or cash reserves.
What kind of properties can I finance with a DSCR loan?
DSCR loans can be used for most non-owner-occupied properties, including:
- Single-family homes
- Duplexes, triplexes, fourplexes
- Condos and townhomes
- Short-term rentals (Airbnb/VRBO)
- Multi-unit rental properties (2–4 units)
Can I use projected rent or do I need a signed lease?
We accept either a signed lease agreement or a market rent estimate provided by the appraiser (Form 1007). For vacant properties, the appraiser’s estimate is commonly used.
Are DSCR loans available for first-time investors?
Yes. Even if this is your first investment property, you can still qualify for a DSCR loan as long as the property meets the rental income and credit score requirements.