The flagship, fully unpacked
DSCR loans, minus the mystique
One ratio decides everything: rent ÷ payment. Here’s how it works, where the myths are wrong, and the exact path from "found a deal" to keys — the version we’d text a friend.
The whole formula
One line of math
$2,600 rent over a $2,150 payment is a DSCR of 1.21 — the property covers itself with 21% to spare. Above ~1.0 generally works; above ~1.25 generally prices better. Below 1.0 is where structuring (more down, interest-only) earns its keep.
Myth surgery
Six things "everyone knows" that aren’t true
DSCR loans are for people who can’t qualify anywhere else.
The truth: DSCR loans are for people optimizing. Plenty of borrowers who could qualify conventionally choose DSCR anyway — for LLC vesting, for keeping rentals off their personal DTI, for skipping the tax-return excavation, or for scaling past the conventional 10-property limit. It’s a strategy, not a consolation prize.
You need a DSCR of at least 1.25 or it’s a hard no.
The truth: Minimums vary by program and change over time — many live around 1.0, and some accept ratios below 1.0 with a stronger down payment. Interest-only structures also lift the ratio by shrinking the payment. Sub-1.25 is a structuring conversation, not a rejection letter.
No income verification means no underwriting.
The truth: DSCR files are fully underwritten — credit, assets, reserves, appraisal, rent schedule, entity docs. What changes is the income question: the property answers it instead of your tax returns. Different standards, not lower ones.
Airbnb income never counts.
The truth: Short-term rental treatment varies widely: some programs use market long-term rent, some accept documented STR revenue history, some use specialized STR data. It’s exactly the kind of program-specific detail worth a two-minute text before you write the offer.
Prepayment penalties make DSCR loans a trap.
The truth: Prepay periods are a pricing lever, not a trap — you’re trading flexibility for a better rate, and most programs let you buy the penalty down or out entirely. State rules differ too. The right answer depends on your exit timeline, which is a conversation we have before you lock anything.
You can use a DSCR loan to buy your own house.
The truth: You can’t — and it matters. DSCR loans are business-purpose loans for non-owner-occupied investment property only. If you’re buying a home to live in with light documentation, that’s a bank statement or 1099 program instead. We’ll point you at the right shelf.
Deal to keys
The six-step DSCR path
- 1
Run the ratio
Rent ÷ PITIA on our calculator. Thirty seconds tells you whether the deal is in the zone or needs restructuring.
- 2
Text the deal
Address, expected rent, and price. We pressure-test the rent figure against market data and name the program.
- 3
Terms & structure
Down payment, prepay options, IO vs. amortizing, LLC vs. personal vesting — we map the trade-offs in one conversation.
- 4
Light-doc file
Entity docs, insurance quote, asset statements, appraisal with rent schedule (Form 1007). Our checklist makes it a 20-minute gather.
- 5
Appraisal & underwrite
The appraiser confirms value and market rent; underwriting confirms the ratio, credit, and reserves. No income documents in sight.
- 6
Close & collect
Sign personally or as your LLC, get keys, collect rent. Then text us the next address — that’s how portfolios happen.
The money questions
DSCR FAQ
What credit score do DSCR loans want?
Typical program minimums start in the 620–680 range, with pricing improving as scores climb. Credit still matters on a DSCR loan — it’s the income documentation that goes away, not the credit review.
How much are reserves, and why do they exist?
Programs commonly want several months of PITIA in liquid reserves after closing — the cushion that covers a vacancy or a furnace. Requirements scale with the deal and your portfolio size.
Can I do a cash-out refinance with a DSCR loan?
Yes — DSCR cash-out refis are a core BRRRR tool: pull equity out of a stabilized rental to fund the next acquisition, with the property’s rent still doing the qualifying.
Do DSCR loans report on my personal credit?
It varies by how the loan is structured and vested — many investors specifically use DSCR + LLC structures to keep properties off their personal DTI for future conventional borrowing. Bring your five-year plan and we’ll structure toward it.
What property types work?
Single-family rentals, 2–4 units, condos, and townhomes are the bread and butter; some programs reach into 5–8 unit and mixed-use territory. Rural properties and condotels get more scrutiny — ask before you offer.
Ready to run a real deal?
Calculator first if you like dashboards, text first if you like answers. Either way the next step takes two minutes.