How DSCR loans work
A debt service coverage ratio (DSCR) loan compares the property's expected rent with its monthly payment, taxes, insurance and HOA dues. If the rent covers the costs by enough, you can qualify without tax returns or pay stubs. These loans are for investment properties only, never a home you live in.
What to expect
- Larger down payments, commonly 20% to 25%
- Higher rates than owner-occupied loans
- Cash reserves, often several months of payments
- Loans can close in your name or an LLC's
Other investment options
If you have documented income, a conventional investment property loan may cost less. We'll compare both.
Questions
What DSCR do I need?
Many lenders look for 1.0 or higher, meaning rent at least covers the payment. Some allow lower ratios with a bigger down payment.