DSCR Loans
Specialized real estate financing based on property cash flow rather than borrower income
Apply for DSCR FinancingWhat is a DSCR Loan?
A Debt Service Coverage Ratio (DSCR) loan is a specialized real estate financing option that qualifies borrowers based on the property's income potential rather than the borrower's personal income. This makes DSCR loans ideal for real estate investors, particularly those who are self-employed or have complex income situations.
The DSCR is calculated by dividing the property's net operating income by its debt obligations. A ratio of 1.0 means the property generates just enough income to cover its debt payments, while higher ratios indicate stronger cash flow and typically result in better loan terms.
Loan Amounts
$100,000 - $5,000,000
Interest Rates
Starting at 5.5%
Terms
5, 7, 10, and 30-year options
Minimum DSCR
Typically 1.25 or higher
Benefits of DSCR Loans
No Income Verification
Qualify based on the property's income potential rather than your personal income, perfect for self-employed investors or those with complex tax situations.
Competitive Interest Rates
Access favorable rates compared to other investment property loans, especially for properties with strong cash flow and higher DSCR ratios.
Flexible Property Types
Finance various investment properties including single-family homes, multi-family units (up to 4 units), condos, townhouses, and some commercial properties.
Scalable Portfolio Growth
Build your real estate portfolio more efficiently by qualifying based on each property's performance rather than your personal debt-to-income ratio.
How DSCR Loans Work
Property Evaluation
We assess the property's income potential and calculate its Debt Service Coverage Ratio by dividing the net operating income by the proposed debt payments. Properties with a DSCR of 1.25 or higher typically qualify for the best terms.
Loan Structuring
Based on the property's DSCR and other factors like property type and location, we structure a loan with appropriate terms, rates, and conditions. Unlike traditional loans, your personal income is not a primary qualifying factor.
Streamlined Approval
Our approval process focuses on the property rather than complex personal financial documentation. We verify property details, conduct an appraisal, and review basic borrower qualifications like credit score.
Funding & Property Management
After closing, you'll receive the funds to complete your property purchase or refinance. The property's rental income is then used to service the loan payments, creating a self-sustaining investment.
Frequently Asked Questions
What is a DSCR loan?
A Debt Service Coverage Ratio (DSCR) loan is a type of real estate financing that qualifies borrowers based on the property's ability to generate income rather than the borrower's personal income. The DSCR is calculated by dividing the property's net operating income by its debt obligations.
What DSCR ratio do I need to qualify?
Most lenders look for a minimum DSCR of 1.25, meaning the property generates 25% more income than needed to cover the loan payment. However, some programs may accept ratios as low as 1.0 (break-even) with other compensating factors like higher down payments.
What are the typical terms for DSCR loans?
DSCR loans typically offer terms from 5 to 30 years with fixed rates available. Loan amounts range from $100,000 to $5 million, with interest rates starting around 5.5% depending on the property type, DSCR ratio, and market conditions.
What credit score do I need for a DSCR loan?
Most DSCR loan programs require a minimum credit score of 640, though some may go as low as 620 with compensating factors. The property's income potential is the primary consideration, but credit history still plays a role in approval and rate determination.
How much down payment is required?
DSCR loans typically require 20-25% down payment for residential investment properties. Commercial properties or lower DSCR ratios may require higher down payments of 30% or more.
How quickly can I close on a DSCR loan?
The typical closing timeline for DSCR loans is 2-4 weeks, which is often faster than conventional loans but slightly longer than hard money options. The process includes property appraisal, income verification, and standard closing procedures.
Ready to Finance Your Investment Property?
Apply now for DSCR financing and leverage your property's income potential to secure competitive funding.