What is a DSCR loan? +
A Debt Service Coverage Ratio (DSCR) loan is a type of investment property mortgage where the lender qualifies you based on the property's rental income rather than your personal income. The DSCR ratio is calculated as: Monthly Rent ÷ Monthly PITIA (principal, interest, taxes, insurance, HOA). A ratio of 1.0 means the rent exactly covers the payment. Most lenders require 0.75 or higher.
Do I need to show tax returns or pay stubs? +
No. DSCR loans are a "no income" or "no-doc" product in terms of personal income verification. We do not review W-2s, 1040s, pay stubs, or bank statements for income purposes. Qualification is driven entirely by the property's rental income relative to the loan payment.
Can I close in an LLC? +
Yes. Many DSCR lenders allow vesting in a single-member LLC or other entity. This is one of the most requested features for investors who want asset protection. Note that if you close in an entity, the loan is treated as a business-purpose loan and some state consumer protection laws may not apply.
How is short-term rental income handled? +
For Airbnb or VRBO properties, lenders typically use the lower of: (1) 12-month actual STR income from bank statements, or (2) AirDNA projected market rent for the area. If the property is new or has no rental history, AirDNA data is used. This gives you a clear path even without an established track record.
What's the minimum down payment for a DSCR loan? +
Most DSCR programs require 20–25% down on a purchase, meaning the max LTV is 75–85%. Some programs go up to 85% LTV for borrowers with strong DSCR ratios (1.25+) and good credit (720+). Refinances follow similar LTV guidelines depending on cash-out vs. rate-and-term.
Can I do a cash-out refinance with DSCR? +
Yes. Cash-out refinances are very common with DSCR. Many investors use DSCR cash-out refi to pull equity from one property and fund the down payment on the next. Typical max LTV for cash-out is 75%. Seasoning requirements apply — most programs require 6–12 months of ownership before cash-out.
How many properties can I finance with DSCR? +
Unlike conventional loans (which cap financed properties at 10), most DSCR programs have no hard limit on the number of financed properties. Each loan is underwritten based on that individual property's cash flow. This is the primary reason serious investors choose DSCR over conventional financing as they scale.
How do I pull equity out of my rental property without showing tax returns? +
A DSCR cash-out refinance is the answer. The lender qualifies the loan based on the property's monthly rent relative to the loan payment — not your W-2, Schedule E, or tax returns. You can typically access up to 75% of the property's current appraised value. The process is straightforward: appraisal, lease review, credit pull, and closing. No income docs required at any stage. This is one of the most common reasons real estate investors choose DSCR over conventional cash-out refinancing.
Can I use a DSCR loan if I'm self-employed or my income is hard to document? +
Yes — DSCR loans were largely designed for exactly this situation. If you're self-employed, a business owner, or someone whose taxable income looks lower than your actual earnings after deductions, conventional lending becomes difficult. DSCR bypasses personal income entirely. The property's rent is the income. Your business structure, write-offs, and Schedule C have no impact on qualification. This is why DSCR has become the primary financing tool for self-employed real estate investors in CA & TX.
What is the BRRRR strategy and how does DSCR fit into it? +
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. It's a portfolio-building strategy where an investor acquires a distressed property, rehabilitates it, rents it out, and then refinances into a long-term loan to pull capital back out and repeat the cycle. DSCR is the "refinance" step. Once the property is rehabbed and producing rent, a DSCR cash-out refinance pays off the hard money or bridge loan and recycles your equity into the next deal — without touching your income docs. There is no limit to how many times you can execute this cycle with DSCR financing.
What credit score do I need for a DSCR loan? +
Most DSCR programs start at a 620 minimum credit score, though pricing improves significantly at 680 and again at 720+. Borrowers with 740+ credit and strong DSCR ratios (1.25 or higher) typically access the best rates and highest LTVs. Credit score affects rate, LTV ceiling, and reserve requirements — but it does not trigger income documentation. Even at lower credit tiers, DSCR remains a no-income-verification product.
How is a DSCR loan different from a conventional investment property loan? +
Conventional investment property loans (Fannie Mae / Freddie Mac) require full income documentation — tax returns, W-2s, pay stubs, and debt-to-income ratio analysis. They also cap the number of financed properties at 10 and typically require the property to be in your personal name. DSCR loans require none of that. Qualification is based on the property's rent alone, there is no portfolio cap, and closing in an LLC is permitted on most programs. DSCR trades a slightly higher rate for dramatically simpler qualification and greater flexibility — a trade-off most serious investors make willingly.
