Commercial DSCR loans qualify the building, not your tax return — the property’s own income carries the file. If you already own rental homes financed with DSCR loans, the commercial version will feel familiar. The lender reads the leases, nets out the expenses, and asks one question: does the income cover the payment? For self-employed investors, that single question replaces a mountain of personal paperwork.
From rental homes to commercial buildings
On a rental house, DSCR is simple: the market rent against the mortgage payment. A commercial building works the same way, one level up. Instead of a single rent figure, the lender starts from the rent roll — every lease in the building — and works down to net operating income, or NOI. That number, not your personal salary, is what qualifies the loan.
How commercial DSCR loans measure income
NOI is the building’s collected rent minus the real costs of running it: property taxes, insurance, management, maintenance, and a reserve for vacancy. Commercial DSCR loans divide that NOI by the proposed annual loan payment. The result is the coverage ratio, and most programs want it between 1.10 and 1.25. Run your own numbers with our DSCR calculator before you offer.
What actually carries the file
Because the property qualifies itself, the documents are about the property:
- The rent roll and leases: who pays what, how long remains on each term, and whether the leases are gross or triple-net.
- The operating statement: a trailing-twelve-month view of income and expenses, so the NOI is proven rather than promised.
- The appraisal: value plus the appraiser’s read on market rents, which lenders use to sanity-check the rent roll.
- Your credit and experience: FICO floors typically sit near 620 to 660, and prior landlord experience strengthens pricing.
Where commercial DSCR loans live
This underwriting is the engine inside most small-balance commercial loans: roughly $100,000 to $5 million, leverage near 70 to 80 percent of value, and terms out to 30 years. Documentation tiers run from full-doc, which earns the best pricing, down to files built on the leases and the appraisal alone. Owner-users who will occupy at least half of the building can instead consider SBA programs, which qualify on the operating business rather than the rent roll.
A typical deal
An investor offers $800,000 for a six-bay retail strip in Fort Lauderdale. The rent roll collects $102,000 a year, and after taxes, insurance, management, and a vacancy reserve, the NOI lands at $78,000. At 75 percent of value, the loan is $600,000. At 1.20 coverage, that NOI supports an annual payment up to $65,000 — and the proposed payment sits comfortably under it. He closes in his LLC on a 30-year term, with no personal tax returns in the file.
Ready to run your numbers?
Alpha Equity Lending structures commercial DSCR loans across Florida, and we pressure-test the NOI and coverage before you go under contract. Send the rent roll through our submit your deal page — 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.
