Debt Service Coverage Ratio (DSCR) loans allow real estate investors to qualify based on the property's rental income rather than personal income — perfect for self-employed investors and portfolio builders.
DSCR Loan Basics
- Qualification: property income must exceed mortgage by 1.0-1.25x
- No personal income verification required
- Down payment: 20-25%
- Rates: 0.5-1.5% higher than conventional
- Available for 1-10+ units
Example: a rental producing $2,500/month with a $2,000 mortgage has a 1.25 DSCR — qualifying for most lenders. These loans have become the go-to financing tool for serious real estate investors.
