Guide
The Complete Guide to DSCR Loans
How DSCR works
The lender calculates a debt service coverage ratio by dividing the property’s net operating income by its annual debt service — mortgage principal, interest, taxes, insurance and HOA. Because qualification rests on the property, personal income and tax returns are generally not required.
- Qualification is property-based, not income-based
- Works for self-employed and portfolio investors
- Common on single-family rentals, small multi-family and short-term rentals
What ratio you need
Programs vary, but many start around a 1.0 ratio, meaning rent covers the payment.
| Typical minimum DSCR | ~1.0 (varies by lender) |
| Max LTV | Up to ~80% |
| Personal income docs | Not required |
| Term | 30-year fixed and ARM options |
How DSCR is priced
Pricing reflects the property’s risk rather than your credit alone: LTV, DSCR, property type, loan size and whether it is a purchase, term or cash-out refinance. A stronger ratio and lower LTV generally improve the terms.
When DSCR beats conventional
- You cannot document personal income easily
- You already carry several mortgages
- You want to scale a portfolio without debt-to-income limits
- You are buying in an entity or a non-warrantable scenario
Frequently asked questions
Do DSCR loans require tax returns?
No — qualification is based on the property’s rental income.
Can I use DSCR for a short-term rental?
Yes, though lenders differ on how they treat STR projections.
How much can I borrow?
Up to roughly 80% LTV depending on the program and property.