Question 1

What is a DSCR loan?

Accepted Answer

A Debt-Service Coverage Ratio (DSCR) loan is an investment-property loan. Some DSCR programs use the property's qualifying rental income and housing expense as a main part of the review. Credit, reserves, property, and program rules also apply.

Question 2

How is DSCR calculated?

Accepted Answer

A common method divides qualifying monthly rent by the monthly property obligation. The obligation can include principal, interest, property taxes, insurance, association dues, and other required costs. Each lender and program can define qualifying rent and expenses differently.

Question 3

What DSCR does a lender require?

Accepted Answer

The required ratio varies by lender and loan program. A lender can also apply credit, reserve, property, loan amount, occupancy, and other rules. A ratio by itself does not establish eligibility or approval.

Question 4

Do DSCR loans require personal income documents?

Accepted Answer

Some DSCR programs may not require traditional personal-income documents. Requirements vary by lender and loan program. A lender can still review credit, assets, reserves, ownership structure, and property information.

Question 5

Who may consider a DSCR loan?

Accepted Answer

A real estate investor may consider a DSCR loan when the program fits the property and financing goal. A licensed mortgage professional must review the complete scenario and available programs.

Online applications are temporarily unavailable

DSCR loan FAQs