What is a DSCR loan?
A DSCR loan is a business-purpose rental property loan that qualifies on the property's debt service coverage ratio: monthly rent divided by the monthly payment, including taxes, insurance and HOA dues. The lender looks at whether the property pays for itself, not at your personal income.
At 1.20x or higher you qualify for the program's best leverage. Between 1.00x and 1.19x the loan is still available with a lower maximum LTV.
Estimate only. Final leverage depends on appraisal, verified rents, reserves and lender approval. This is not a commitment to lend.
DSCR loan terms and requirements
Loan amounts
- $100,000 minimum
- Up to $2.5 million without cash-out
- Up to $1.5 million with cash-out
- Maximum cash-out of $500,000
Loan options
- 30-year fixed, fully amortizing
- 10/6 ARM, 10 years interest-only
- 7/6 ARM, 7 years interest-only
- 5/6 ARM, 5 years interest-only
Leverage
- Up to 80% LTV on purchases
- Up to 75% LTV on refinance and cash-out
- Purchase terms available within 3 months of an all-cash purchase
Eligible properties
- Single-family, 2–4 units, condos, townhomes, PUDs
- Mixed-use with more than 50% residential
- Short-term rentals, sized on long-term market rent
- Property value from $75,000
Borrower
- LLC or corporation
- Minimum 680 credit score
- Guarantor with 20% or greater ownership
- Non-U.S. citizens considered
Reserves
- Under $1M: 3 months
- $1M to $2M: 6 months
- Over $2M: 9 months
- Add 3 months for cash-out. Cash-out can count toward reserves.
DSCR loans for LLCs and rental portfolios
DSCR loans close in an LLC or corporation, with a guarantor who owns 20% or more. Single rentals and portfolios of up to 10 properties can be financed, and short-term rentals are sized on long-term market rent.
Many investors use a DSCR loan as the long-term exit from a bridge or fix-and-flip loan once a property is renovated and leased. Our underwriting lets us evaluate qualifying DSCR scenarios and issue term sheets directly.
DSCR loan FAQs
What credit score do I need?+
The minimum is 680. Higher scores and stronger DSCR qualify for higher leverage, up to 80% LTV on purchases.
Can I put several rentals on one loan?+
Yes. Portfolios of up to 10 properties can be financed together when all of them are in the same county.
Are short-term rentals eligible?+
Yes. DSCR on a short-term rental is calculated using the appraiser's long-term market rent.
What disqualifies a borrower?+
A bankruptcy, foreclosure, short sale or deed-in-lieu within the last 4 years, or any 30-day late mortgage payment in the last 12 months.
Is there a prepayment penalty?+
You choose: 5-year yield maintenance, a 5-, 3- or 2-year step-down, 1 year, or no prepayment penalty. Shorter or no penalty affects pricing.