DSCR Loans for Rental Properties
A DSCR loan qualifies you on your rental property's income instead of your personal income or tax returns, a 30-year loan built for buy-and-hold investors, not flippers. No W-2s, paystubs, or tax returns required.
DSCR rental loan, at a glance
How does a DSCR loan work?
DSCR stands for debt service coverage ratio, the property's annual rental income divided by the sum of the annual mortgage payment, insurance, real estate tax, and any HOA dues. A ratio of 1.0 or greater is generally required, and the larger the ratio, the lower your interest rate will be. If the ratio comes in below 1.0, a smaller loan amount may be required instead. Your credit score also factors into the rate, and a lower loan-to-value brings the rate down further. That makes it a fit for investors who'd rather qualify on the property's numbers than on a stack of personal paperwork.
DSCR loan vs. hard money loan: not the same thing
These two get lumped together often, but they're actually different products with different underwriting.
| DSCR rental loan | Hard money loan | |
|---|---|---|
| Term | 30 years | 6–12 months |
| Loan-to-value | 75%–80% | 80%–90% |
| Typical close | ~30 days | 1–2 weeks |
| Best for | Buy-and-hold rentals | Fix-and-flip |
DSCR loan questions, answered
What are DSCR loan requirements?
SFI Loans qualifies DSCR rental loans based on the property's rental income and your credit score, with no tax returns, W-2s, or paystubs required. Loan-to-value is typically 75% to 80%, and a debt service coverage ratio of 1.0 or greater is generally required.
What are DSCR loan rates?
DSCR loan rates aren't a single fixed number. They depend on your debt service coverage ratio, your credit score, and your loan-to-value. A higher coverage ratio and a lower loan-to-value both bring the rate down.
How fast does a DSCR loan close?
Most DSCR rental loans close in about 30 days.
Can I use a DSCR loan for a property I plan to rehab?
Yes, it's possible to purchase an investment property that needs to be rehabbed. However, a DSCR loan doesn't provide rehab funds, so you'd generally need to provide your own funds to fix up the property once the purchase closes. Most DSCR loans require a paying tenant in place within 90 days.
Ready to see what your rental property qualifies for?
Get prequalified before you make an offer, so financing is never the reason a deal falls through.