🏢 What Is a DSCR Loan? A Smarter Option for Real Estate Investors
If you’re building a rental property portfolio or expanding into real estate, you might have heard of DSCR loans. They’re designed with investors in mind—and they focus more on the property’s income than your personal income. Let’s take a closer look.
📊 What Is a DSCR Loan?
A DSCR (Debt Service Coverage Ratio) loan is a type of mortgage that looks at a property’s ability to pay for itself. In simple terms, it compares the property’s rental income to its monthly mortgage expenses (principal, interest, taxes, and insurance).
Lenders use the formula:
DSCR = Gross Rental Income ÷ Monthly Mortgage Expenses
✅ What Makes It Investor-Friendly?
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No personal income verification – The loan approval is based on the cash flow of the property, not your job or W-2s.
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Faster, simpler process – Less paperwork makes these loans quicker to close.
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Great for portfolio growth – Ideal for investors with multiple properties or self-employed borrowers.
💡 What’s a Good DSCR?
Most lenders look for a DSCR of 1.0 or higher—which means the property brings in enough income to cover the mortgage. A DSCR of 1.25 or more is considered strong and may qualify you for better terms.
🏘️ Perfect For:
• First-time investors buying rental properties
• Experienced landlords expanding their portfolio
• Self-employed buyers who don’t want to document income
Just remember: terms, interest rates, and minimum requirements can vary by lender, so it’s important to speak with a loan officer who understands investment lending.
🔍 Ready to Learn More?
If you’re an investor looking to finance your next property—or your first one—I’m here to help walk you through the best options, including DSCR loans.