A DSCR (debt service coverage ratio) loan is a non-QM loan for investment properties. Instead of your tax returns or pay stubs, the lender looks at whether the property's rent covers its payment.
A good fit for
- Real estate investors buying or refinancing rentals
- Investors with several properties
- Self-employed investors whose tax returns show low income
- Long-term and some short-term rental properties
How it works
- DSCR = monthly rent ÷ monthly payment (principal, interest, taxes, insurance and any HOA)
- Example: $3,000 rent ÷ $2,500 payment = 1.20 DSCR
- Many lenders look for a DSCR of about 1.0 or higher; some go lower with tradeoffs
- Rent usually comes from a current lease or the appraiser's market rent estimate
- No personal income or employment verification in most cases
- Can be used for purchases, rate-and-term refinances and cash-out refinances
Keep in mind
- For investment properties only — not for a home you live in
- Down payments are commonly 20–25% or more
- Rates are typically higher than conventional investment loans
- Lenders usually want cash reserves and a solid credit score
- Some loans carry prepayment penalties — ask before you commit
- Can often close in an LLC's name
Is a DSCR Loan right for you?
Every lender's guidelines differ — Chip will shop them for you.
Related loan options
This page is general education, not a loan offer or commitment. Terms, eligibility and availability vary by lender and change over time.