Rental Property DSCR Loans

Check your DSCR eligibility in 60 seconds!

DSCR Loans provide a more flexible and accessible financing option for rental property compared to a traditional mortgage. Investors are able to qualify based primarily on the rental income of the property rather than personal financial history, income statement and tax returns. The DSCR score ensures that the cash-flow from rent will cover the debts on the property.

Want to learn the DSCR score of a property you own or intend to buy? Check out our free calculator to see if your rental property is a fit!

DSCR Loan Requirements

Leverage

• Up to 80% LTV

Loan Types

• Purchase

• Cash-Out Refinance

• Rate & Term Refinance

• 2nd Mtg

Property Types

• Non-owner occupied

• 1-4 unit residential

• 5-10 unit apartment

• Condo, Townhome, Single-Family, Du/Tri/Quad - Plex

• Portfolios - 5+ rental properties

Loan Amounts

• Minimum $50,000

• Maximum $2,500,000

Minimum Credit Score

• 660

Minimum DSCR Score

• 0.80

Available Terms

• 30 YR Fixed

• 5/1, 7/1, 10/1 ARM's

• Interest Only Periods

DSCR loans aren't one-size-fits-all, but they're built for a wide range of investors. Here's who benefits most:

The Self-Employed Investor
Your tax returns don't reflect your real buying power. You write off expenses, reinvest profits, and run a lean operation, which means your taxable income looks lower than it is. DSCR loans ignore your personal tax returns entirely and focus on what actually matters: does the property cash flow?

The W-2 Earner Who's Maxed Out
You've used your DTI limit on existing mortgages and can't qualify for another conventional loan, even though you have the cash reserves and the deals to back it up. DSCR loans don't count your personal debt-to-income ratio. Each property stands on its own.

The LLC Portfolio Builder
You hold your properties in an LLC or business entity for liability protection and cleaner bookkeeping. DSCR loans are commonly structured for LLCs and corporations, so your entity can borrow directly without complicating your personal financial profile.

The Short-Term Rental Investor
You're targeting Airbnb or VRBO properties where projected income is strong but there's no lease to show a traditional lender. DSCR loans can qualify short-term rentals using AirDNA market data, so a vacant property with great income potential can still get funded.

The Portfolio Scaler
You're not buying one property, you're building a business. DSCR loans allow you to finance multiple properties simultaneously based on each asset's performance, without being capped by personal income limits or the number of mortgages on your credit report.

Is a DSCR Loan Right for You?

Apply Now – Pre-Qualify in Minutes

You didn’t come this far to stop

DSCR Loan FAQs for Real Estate Investors

How do lenders calculate DSCR differently for short-term vs long-term rentals?

Lenders calculate DSCR for long-term rentals using actual lease agreements or market rent estimates from an appraisal. For short-term rentals (like Airbnb or VRBO), lenders may use historical income data, AirDNA reports, or projected short-term rental income depending on the program.

Because short-term rental income can fluctuate, some lenders apply more conservative assumptions or higher DSCR requirements to account for seasonality and vacancy risk.

Can you qualify for a DSCR loan with a DSCR below 1.0?

Yes, it is possible to qualify for a DSCR loan with a ratio below 1.0, but it depends on the lender and overall loan profile.

In these cases, lenders may require:

• A larger down payment

• Higher reserves

• A strong credit profile

Some lenders offer “no DSCR” or “DSCR < 1.0” programs, but these typically come with higher interest rates due to increased risk.

How does vacancy rate impact DSCR loan approval?

Vacancy directly impacts DSCR because it reduces the effective rental income used in the calculation.

Lenders may:

• Apply a vacancy factor (typically 5–10%)

• Use stabilized rent projections instead of peak income

• Require a higher DSCR threshold for properties in weaker rental markets

A higher vacancy rate lowers the DSCR, which can affect approval or loan terms.

What expenses are included when calculating DSCR?

When calculating DSCR, lenders use Net Operating Income (NOI), which accounts for common property expenses such as:

• Property taxes

• Insurance

• HOA dues (if applicable)

However, DSCR calculations typically exclude capital expenditures and depreciation, focusing only on operating performance.

How do DSCR loan rates change based on the DSCR ratio?

DSCR loan rates are often tiered based on the strength of the ratio.

• Higher DSCR (e.g., 1.15+) → lower interest rates and better terms

• Lower DSCR (e.g., near 1.0) → higher rates

• Below 1.0 DSCR (e.g., .75 - 1.0) → higher rates and stricter requirements

A stronger DSCR signals lower risk to the lender, which can result in pricing incentives and improved loan options.

Can you refinance multiple properties using a DSCR loan?

Yes, many lenders allow investors to refinance multiple properties or entire portfolios using DSCR loan programs.

Portfolio DSCR loans evaluate:

• Combined property income

• Overall debt obligations

• Stabilized rental performance

This approach can help investors unlock equity and scale their portfolio more efficiently without relying on personal income.

Are DSCR loans available for LLCs or business entities?

Yes, DSCR loans are commonly structured for LLCs, corporations, and other business entities, making them ideal for real estate investors.

Financing through an entity can provide:

• Liability protection

• Easier portfolio management

• Separation between personal and business finances

Lenders will still review the borrower’s credit, but the qualification is primarily based on the property’s income.

How does appraisal rent vs actual rent affect DSCR?

Lenders typically use the lower of actual rent or appraised market rent when calculating DSCR.

• If actual rent is lower → DSCR may decrease

• If market rent is higher → some lenders allow projected income to improve DSCR

For vacant properties, lenders usually rely entirely on the appraisal’s market rent estimate to determine income.

How do DSCR loans compare to conventional investment property loans?

DSCR loans and conventional loans differ primarily in how borrowers qualify:

• DSCR Loans: Based on property income and cash flow

• Conventional Loans: Based on personal income, employment, and debt-to-income ratio (DTI)

DSCR loans offer:

• Faster approvals

• No income documentation

• Greater flexibility for investors

Conventional loans may offer:

• Lower interest rates

• Stricter qualification requirements

Investors often choose DSCR loans when they want to scale quickly without being limited by personal income.

What's the difference in DSCR vs DTI (Key Difference)?

The key difference between DSCR (Debt Service Coverage Ratio) and DTI (Debt-to-Income ratio) is what’s being evaluated.

• DSCR measures a property’s income compared to its debt obligations

• DTI measures a borrower’s personal income against their debts

DSCR loans focus on the performance of the investment property, whereas traditional loans rely on the borrower’s personal financial profile.

Get In Touch

Contact Cape Henry Capital for tailored financing solutions and educational resources to empower your investments.