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Investment Property Financing

DSCR Loans Built Around Your Property's Cash Flow

Financing an investment property doesn't always have to depend on traditional personal income documentation. A Debt Service Coverage Ratio (DSCR) loan looks primarily at the rental property's ability to support its housing payment, giving real estate investors another way to finance qualifying rental properties.

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✓ Rental-property focused ✓ Investor financing ✓ Alternative qualification
The Basic Formula

What does DSCR measure?

DSCR compares the property's qualifying rental income with the monthly debt obligation used to underwrite the loan.

Monthly Qualifying Rent
Monthly Housing Expense
Simple example:
$2,500 qualifying monthly rent ÷ $2,000 monthly housing expense = 1.25 DSCR
A Different Way to Qualify

What is a DSCR loan?

DSCR loans are designed for real estate investors. Instead of relying solely on the borrower's traditional employment income, underwriting can evaluate the income generated by the investment property itself.

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Property Cash Flow Matters

Qualification is centered around the rental income the property can generate compared with the qualifying monthly housing expense.

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Built for Investors

DSCR financing can be useful for investors purchasing or refinancing rental properties when traditional income documentation doesn't tell the full story.

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Portfolio-Friendly

For qualifying borrowers, DSCR programs may provide another path to acquiring or refinancing investment properties as a portfolio grows.

Understanding the Number

How does a DSCR ratio work?

At its simplest, a DSCR of 1.00 means the property's qualifying rental income and qualifying monthly housing expense are equal.

A ratio above 1.00 indicates that qualifying rental income exceeds the housing expense. A ratio below 1.00 indicates that the property's qualifying rent does not fully cover that expense.

There is no single DSCR requirement that applies to every loan. Minimum ratios, loan-to-value limits, credit requirements, reserves, eligible property types, and pricing can vary by program.

1.25
Positive Coverage Rental income equals 125% of the qualifying housing expense.
1.00
Break-Even Coverage Rental income and the qualifying housing expense are equal.
0.90
Below Break-Even Rental income equals 90% of the qualifying housing expense.
Investor Calculator

Estimate Your DSCR & Loan-to-Value

Enter a few property and loan figures for a quick estimate of how the property's rent compares with its monthly housing expense.

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Use expected or current monthly rent for this estimate.
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$
$
$
$
$
Estimated DSCR
1.32
Positive Cash-Flow Coverage
Monthly Housing Expense $1,900
Estimated LTV 75.0%
Monthly Rent $2,500
Monthly Coverage +$600
See What You May Qualify For →

This calculator is for educational and illustrative purposes only. It is not a loan approval, underwriting decision, rate quote, or commitment to lend. Actual qualifying rental income, housing expense calculations, property value, LTV, DSCR, and program requirements may differ.

Beyond the Ratio

What matters when qualifying for a DSCR loan?

DSCR is an important piece of the equation, but it isn't the only factor considered when evaluating an investment property loan.

1

DSCR

The relationship between qualifying rental income and the property's qualifying monthly debt or housing expense.

2

Loan-to-Value

The requested loan amount compared with the property's qualifying value or purchase price can affect eligibility, pricing, and required equity.

3

Credit Profile

Borrower credit history and credit score can still be important, even when a program does not qualify the loan primarily from traditional personal income.

4

Cash Reserves

Depending on the program, borrowers may need to document assets or reserves available after closing.

5

Property & Rent

Property type, occupancy, current lease terms, and/or market rent documentation may factor into the underwriting analysis.

6

Loan Purpose

Program options can differ depending on whether you're purchasing a new investment property, refinancing, or seeking cash out from an existing rental.

Getting Started

Financing an investment property with DSCR

1

Tell Us About the Property

Share the purchase price or estimated value, expected loan amount, property type, and whether you're purchasing or refinancing.

2

Review Rental Income

We'll evaluate the rental-income information and documentation applicable to the loan and property.

3

Compare Program Options

DSCR, LTV, credit, reserves, and other property details help determine available financing options.

4

Move Toward Closing

Once you've selected an option, your loan team will guide you through documentation, underwriting, and closing.

Compare Your Options

DSCR vs. conventional investment property financing

Both can finance investment real estate, but the way a borrower qualifies can be very different.

Qualification Factor
DSCR Loan
Conventional Investment Loan
Primary Income Focus
Property rental cash flow
Borrower's qualifying personal income
Personal DTI
May not be the primary qualifying measurement
Generally an important underwriting factor
Best Fit
Rental-property investors
Borrowers fitting conventional guidelines
Property Cash Flow
Central to qualification
One component of the overall file
DSCR Loan FAQs

Common questions from real estate investors

What does DSCR stand for?
DSCR stands for Debt Service Coverage Ratio. In investment property lending, it is a measurement comparing qualifying property income with the debt or housing expense used to underwrite the property.
What is considered a good DSCR?
A DSCR above 1.00 indicates that qualifying property income exceeds the debt expense used in the calculation. However, there is no universal minimum DSCR for every loan. Requirements and pricing can vary depending on the lender, investor, loan program, LTV, credit profile, property, and other factors.
Do DSCR loans require W-2s or tax returns?
DSCR financing is designed around property cash flow rather than traditional personal-income qualification. Documentation requirements vary by program, so borrowers should speak with a loan professional about the documentation required for their specific scenario.
Does my personal debt-to-income ratio matter?
Unlike traditional mortgage qualification, personal DTI may not be the primary qualifying measurement for a DSCR program. The property's qualifying rental income and debt obligation are generally central to the analysis. Other borrower and property requirements still apply.
Can I use a DSCR loan to purchase a rental property?
DSCR financing may be available for qualifying investment-property purchases. Available programs depend on factors such as property type, loan amount, credit, LTV, rental income, reserves, and other underwriting requirements.
Can a DSCR loan be used for a refinance?
Depending on program guidelines, DSCR financing may be available for qualifying rate-and-term refinances and cash-out refinances of investment properties.
Can first-time real estate investors get a DSCR loan?
Investor-experience requirements vary by program. A loan professional can review your property, credit profile, available assets, and investment scenario to determine which options may be available.
How is rental income determined for a DSCR loan?
The documentation and calculation used for qualifying rent depend on the loan program and property. Current lease information, appraisal-supported market rent, and other documentation may be considered. The amount used for underwriting may differ from the rent entered into an online calculator.

Have an investment property in mind?

Tell us a little about the property and your financing goals. Our team can help you explore DSCR and other investment-property loan options that may fit your scenario.

Start Your Rate Quote →
Information provided on this page, including calculator results, is for educational and illustrative purposes only and is not a commitment to lend, loan approval, or guarantee of loan terms. Loan programs, underwriting requirements, qualifying income calculations, DSCR requirements, credit requirements, LTV limits, reserve requirements, rates, terms, and property eligibility are subject to change and may vary by borrower, property, and program. Additional restrictions and requirements may apply.