DSCR Loans

DSCR loans are for real estate investors buying or refinancing income-producing property. They aren’t available for a home you intend to live in.

They’re the natural fit for investors who have outgrown conventional financing — anyone who’s been told they’ve reached the limit on financed properties, or whose write-offs make their tax returns look far weaker than their actual cash flow. They also work well for self-employed borrowers and business owners who’d rather not document personal income at all, for investors buying through an LLC for liability and privacy reasons, and for out-of-state buyers acquiring property in stronger rental markets.

They’re commonly used to refinance too. If you bought a property with cash or with short-term money, a DSCR refinance is how you convert it into permanent, long-term financing — and pull your capital back out to go do it again.

If you’re finishing a renovation: this is the standard exit for investors who decide to keep a Fix N Flip property as a rental rather than sell it. Worth planning before the rehab starts, since the finished rent figure drives how much you’ll be able to refinance.

• Qualification is based on the property’s rent, not your income — no tax returns, W-2s, or employment verification.
• Your other mortgages don’t count against you — there’s no personal debt-to-income calculation and no cap on financed properties.
• 30-year fixed, adjustable rate, and interest-only options are available, including extended interest-only terms on some programs.
• Close in the name of an LLC or other entity, with a personal guarantee, for liability separation and privacy.
• Purchase, rate-and-term refinance, or cash-out refinance are all available.
• Long-term and short-term rentals both qualify on many programs, with short-term income documented by history or market data.
• Eligible properties include single-family homes, two- to four-unit properties, condos and townhomes, with some programs extending to five- to ten-unit and mixed-use buildings.
• Prepayment penalties usually apply — typically a three- or five-year step-down structure. Buying out of the penalty is often possible for a higher rate, and which option is better depends entirely on how long you plan to hold.

• Investment property only — these are business-purpose loans and cannot be used for a primary residence.
• Debt service coverage ratio — most programs require 1.0 or higher, with options below that at reduced leverage.
• Credit score — generally 620 and above, with the strongest pricing typically at 700 and up.
• Down payment — commonly 20% to 25% on a purchase, with cash-out refinances usually capped around 70% to 75% of value.
• Cash reserves — typically three to six months of payments after closing, sometimes more on cash-out or larger loans.
• A lease or a market rent analysis supporting the income used to qualify.
• Property must be in rentable condition — properties needing significant work generally need short-term financing first.