A DSCR loan is a mortgage that qualifies you on the property’s rental income instead of your personal income — no tax returns, no W-2s, no employment verification. For investors who write off aggressively or own multiple properties, it’s often the cleanest way to keep buying.
The ratio, in plain terms
DSCR stands for debt service coverage ratio: the property’s monthly rent divided by its full monthly payment — principal, interest, taxes, insurance, and any HOA dues. Rent of $2,500 against a $2,000 payment is a DSCR of 1.25 — the property earns 25% more than it costs to carry.
A DSCR of 1.0 is break-even. Most lenders want to see 1.0 to 1.25, though some programs will go below 1.0 with a larger down payment.
Why investors use it
- No income documentation. Your tax returns stay in the drawer. The property qualifies itself.
- No limit on properties financed. Conventional loans cap you at ten; DSCR lenders don’t count.
- Close in an LLC. Most DSCR loans are written to the entity, which conventional loans won’t do.
- Short-term rental income counts. Many programs accept Airbnb or market-rent projections instead of a lease.
How it qualifies
Expect a minimum credit score around 660–680, a down payment of 20–25%, and a few months of reserves. The appraisal includes a rent schedule that establishes market rent — that number, not your word, drives the ratio.
A typical deal
A scenario I see often: an investor with strong rentals but a tax return that shows almost no income, because depreciation ate it. A bank says no. A DSCR lender looks at the duplex renting for $3,400 against a $2,700 payment — a 1.26 ratio — and approves it without a single pay stub.
Run your numbers first
Before you offer on a property, run it through our DSCR calculator to see where the ratio lands. Then tell us about your deal — we’ll pre-screen it within 24 hours, in English or Spanish.
By Andres Jara — Alpha Equity Lending (NMLS #1855083). 20+ years in real estate finance, an MS in Finance, and an active South Florida investor and landlord.
