What is a DSCR loan?

An investor reviewing a property’s numbers over coffee

The short version: a DSCR loan qualifies you based on the rental property’s income, not your personal income.

How it works

DSCR stands for debt service coverage ratio. It’s the monthly rent divided by the full monthly payment: principal, interest, taxes, insurance and any HOA dues.

Example: $3,000 in rent ÷ a $2,500 payment = a DSCR of 1.20. The rent covers the payment with room to spare.

Why investors like it

Usually no tax returns or pay stubs to qualify.
Many programs let you close in an LLC.
It works the same on your second rental as your tenth.

What to know going in

Expect a larger down payment than on a home you live in, and a rate that’s often a bit higher than a conventional loan. Many DSCR loans also have a prepayment penalty. None of that is bad. It’s just good to know up front.

Run your numbers Is DSCR right for me?

Questions? Call or text me at 781-820-4249.

For educational purposes only. Not a commitment to lend. Programs, terms and eligibility vary and are subject to change.