If you're a real estate investor, you've probably heard the term “DSCR loan.” But what exactly is it, and how do you qualify?
What Is a DSCR Loan?
DSCR stands for Debt Service Coverage Ratio. It's a type of mortgage that qualifies you based on the rental property's income — not your personal income.
The lender looks at one simple question: does the property's rent cover the mortgage payment?
How Is DSCR Calculated?
The formula is straightforward: DSCR = Net Operating Income / Total Debt Service.
If a property generates $3,000/month in rent and the total mortgage payment (PITIA) is $2,400/month, the DSCR is 1.25.
What DSCR Ratio Do You Need?
Most lenders require a minimum DSCR of 1.0 — meaning the rent exactly covers the mortgage.
A DSCR of 1.25 or higher is considered strong and qualifies for the best rates. Some lenders go as low as 0.75 for experienced investors.
Who Qualifies for a DSCR Loan?
DSCR loans are designed for real estate investors purchasing or refinancing rental properties.
You don't need W-2s, tax returns, or employment verification. The property's cash flow does the qualifying.
Minimum credit score is typically 660, with 20-25% down payment required.
DSCR Loan Requirements in 2026
- Minimum DSCR: 1.0 (some lenders accept 0.75)
- Credit score: 660+
- Down payment: 20-25%
- Property types: SFR, 2-4 unit, condo, townhouse
- No personal income verification
- Loan amounts up to $3M+
Can You Use Projected Rent?
Yes. Many lenders accept a market rent appraisal for vacant or newly purchased properties.
This means you can qualify for a DSCR loan even before the property has a tenant.
Next Steps
Run your numbers through our free DSCR Calculator to see if your property qualifies.
Or call Nate directly at (858) 254-0955 for a free review of your deal.