How is the DSCR ratio calculated?

DSCR = Gross Monthly Rent ÷ Monthly PITIA (principal, interest, taxes, insurance, association dues). A DSCR of 1.25 means the rent covers 125% of the mortgage payment.

Can I use Airbnb income for a DSCR loan?

Yes, with most DSCR lenders. Some require a 12-month rental history (e.g., AirDNA report or actual receipts), while others accept market rent based on a long-term lease.

Can I close a DSCR loan in an LLC?

Yes, this is one of the biggest advantages of DSCR financing. You'll need to provide your LLC's operating agreement, EIN, and personal guarantees from the members.

Are there prepayment penalties on DSCR loans?

Most DSCR programs include a prepayment penalty for the first 3–5 years. You can usually buy out the prepay penalty for a higher interest rate.

investor loan

DSCR Loans

DSCR (Debt Service Coverage Ratio) loans qualify real estate investors based on the rental income of the property — not personal income or tax returns. They're the go-to program for scaling a rental portfolio.

Down payment: 20%–25%
Credit score: 660 typical; best pricing at 720+
Loan amount: Up to $3M+ depending on program
MI: None required

Best for

Real estate investors with multiple properties
Self-employed buyers with complex tax returns
Investors who write off significant rental income on Schedule E
Buyers using LLC ownership structures
Short-term rental (Airbnb) operators

Eligibility

Property's rental income must cover the mortgage payment (DSCR ≥ 1.0; some lenders allow 0.75)
Credit score of 660+ (varies by lender and DSCR ratio)
20%–25% down payment
3–6 months of reserves per property
Investment property only — no primary residence allowed
Lease agreement or market rent appraisal (Form 1007)

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The upside

No personal income, employment, or tax return verification
Can close in an LLC for asset protection
Unlimited number of properties (no Fannie Mae 10-property cap)
Faster underwriting than full-doc investor loans
Short-term rental income often counts toward DSCR

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Worth considering

Higher interest rates than owner-occupied financing (usually 1%–2% above conventional)
Larger down payment requirement
Prepayment penalties common (often 3–5 years)
Cash reserves required per property

Documents you'll need

Credit report and authorization
Property appraisal with rent schedule (Form 1007)
Existing lease agreement (if leased) or market rent analysis
Two months of bank statements showing reserves
Entity documents if closing in an LLC (operating agreement, EIN)
Insurance quote/binder

Why DSCR changed real estate investing

DSCR loans solved the biggest scaling problem investors faced. Strong performers kept getting denied on the 6th or 7th rental despite healthy rental income, simply because their tax returns showed paper losses. By underwriting the property’s cash flow instead of the borrower’s tax return, DSCR makes it possible to keep buying.

If you’re past 4 financed properties or write off significant depreciation on Schedule E, DSCR is almost always the right move for your next acquisition.

Common questions

How is the DSCR ratio calculated?: DSCR = Gross Monthly Rent ÷ Monthly PITIA (principal, interest, taxes, insurance, association dues). A DSCR of 1.25 means the rent covers 125% of the mortgage payment.
Can I use Airbnb income for a DSCR loan?: Yes, with most DSCR lenders. Some require a 12-month rental history (e.g., AirDNA report or actual receipts), while others accept market rent based on a long-term lease.
Can I close a DSCR loan in an LLC?: Yes, this is one of the biggest advantages of DSCR financing. You'll need to provide your LLC's operating agreement, EIN, and personal guarantees from the members.
Are there prepayment penalties on DSCR loans?: Most DSCR programs include a prepayment penalty for the first 3–5 years. You can usually buy out the prepay penalty for a higher interest rate.