What a DSCR loan actually is
A DSCR loan is a 30-year mortgage for rental property where the property does the qualifying. No W-2s, no tax returns, no employment verification - the lender asks one question: does the rent cover the payment? You can close in an LLC, own as many financed properties as you want, and your personal tax strategy - all those write-offs that make your returns look thin - never works against you.
Who it's for
Three investors live on DSCR loans: the self-employed, whose tax returns understate what they actually make; the portfolio builder who's maxed out conventional financing - banks cap you around ten financed properties, DSCR lenders don't; and the investor who simply doesn't want to hand over two years of personal financials to buy a rental. If any of those is you, this is your product.
How the ratio works
One fraction: monthly rent ÷ the full monthly payment (principal, interest, taxes, insurance, HOA). Above 1.0, the rent carries the loan. Run your numbers in the DSCR Calculator - it computes the ratio the way lenders underwrite it and shows the biggest loan your rent supports.
How your rate is actually determined
There's no single "DSCR rate." Pricing starts with a market index - most lenders price off the 5-year U.S. Treasury - then add a risk premium built from your file. The index moves daily. Ten things move that premium: four you decide when you set up the loan, and six the deal already carries the day you apply. Learn all ten and you can price a rental in your head before it ever reaches an underwriter.
What you decide on this loan
The knobs you turn at the closing table:
- Down payment. Every extra 5% down buys the rate down a notch. 20% gets you in the door; 25% or more gets rewarded.
- Prepay term. DSCR loans carry a stepdown penalty - 3% year one, 2% year two, 1% year three. Accept a longer one and the rate drops; buy it off and it rises. Matters most if you plan to refinance soon.
- Cash-out or not. Pulling cash out prices higher than a straight purchase or a rate-and-term refinance. Take only the cash you actually need.
- Interest-only. An interest-only payment lowers the monthly and can rescue a thin deal - but it nudges the rate up. A lever, not a freebie.
What you bring to this loan
Already set the day you apply - so screen for these before you buy:
- Rent coverage (your DSCR). The big one. Stronger coverage, lower rate - 1.25 unlocks the best tier, below 1.0 adds a real premium. A bigger down payment lifts it.
- Credit score. Pulled to price the loan, not to check your income. Mid-600s can qualify; the best pricing starts in the 720s. The one factor here worth improving before your next file.
- Loan size. Very small loans price worse; larger loans price best.
- Property type. A clean single-family rental prices best. Condos - especially non-warrantable ones - cost more.
- Number of units. One unit is cheapest; a 2-4 unit adds a premium.
- Location. Your state sets the baseline (foreclosure and landlord laws move it), and rural or low-liquidity areas price higher than suburban - a lender wants to know it can resell the property fast.
The first four are yours to move today. The last six are the deal telling you what it is - read them, and you will spot a fundable rental the moment you see it.
Estimated current market rates
5-yr Treasury — + risk premium = — to —
Updated each business day from the U.S. Treasury's published par yield curve. Estimates only - your exact rate comes with your written terms, and it can fall outside this range in either direction.
What lenders typically expect
- Down payment of 20-25% - more for sub-1.0 ratios
- Credit floors starting in the low 600s; best pricing in the 720s and up
- A few months of payments in liquid reserves
- Minimum loan sizes around $100K - smaller properties are hard to place
- An appraisal with a market-rent schedule. Notice what is missing from this list: your income.
Short-term rentals
Airbnb income can qualify, but lenders count it conservatively - the appraiser's estimate, a 12-month revenue history, or market data, usually with a haircut. Verify your city allows STRs before you tie up the property; underwriters check.
Where DSCR fits in a creative deal
In most Stack Method structures, the DSCR loan is the primary lender - the base of the stack that the seller carry and transactional funding build on. It also serves as the end loan in an Echo Method structure. Run the whole structure in the Stack Method Calculator and check the rent coverage in the DSCR Calculator. When both pencil, you have a deal.
How it works with us
DSCR questions, answered
What's a good DSCR?
1.25 and up typically unlocks the best pricing tier. Anything above 1.0 qualifies broadly.
Can I get a DSCR loan below 1.0?
Yes - we have lender options down to 0.75. Expect a bigger down payment and reserves.
Do DSCR lenders check credit?
Yes - to price the loan, not to verify income. Your score sets your tier; your rent does the qualifying.
Can I close in an LLC?
Yes - entity vesting is normal on DSCR loans. Many investors prefer it.
Can I live in the property?
No. DSCR is investment-property financing only, and lenders verify occupancy.
Does the lender use my lease or the appraisal rent?
Generally the lower of your actual lease and the appraiser's market-rent schedule.
Is a DSCR loan hard money?
No - it's 30-year term financing for holds, not a short-term bridge.
How fast can it close?
Weeks, not months - the appraisal is usually the long pole.
Got a deal? Get funded. Real quick.
Two-minute form · same-day decisions on most deals · all 50 states.
Nothing on this website is legal advice. It reflects our opinions and our experience. For legal questions, consult your own counsel.