DSCR Loans

A DSCR loan is a non-QM mortgage for investment properties that qualifies on the property's rental income instead of your personal income. DSCR stands for debt service coverage ratio.

Justin Lazzaro, NMLS #1229453 | Reasy Financial, LLC, NMLS #2446155 | Licensed in Arizona, Pennsylvania, Florida, and Texas

Who a DSCR loan fits

DSCR financing is built for investors who want to qualify on the deal itself, without tax returns or pay stubs.

Investors growing a portfolio

Owners with several financed properties who have outgrown conventional limits, or whose tax returns show heavy write-offs.

Self-employed investors

No personal income documentation and no employment verification. The rent, your credit, your down payment, and your reserves carry the file.

Who it usually does not fit

A home you plan to live in is not eligible. If your documented income qualifies, a conventional investment loan will usually cost less.

How qualifying works

1

We establish the rent

An appraiser's market rent schedule or the current lease sets the rental income. Some lenders accept short-term rental income with documentation.

2

We calculate the ratio

Monthly rent is divided by the full housing payment: principal, interest, taxes, insurance, and any association dues.

3

The ratio sets your options

A ratio at or above break-even generally earns better terms. Some lenders allow lower ratios, or no ratio at all, with a larger down payment.

Minimum ratios, credit requirements, and reserves vary by lender. A prepayment penalty is usually optional where state law allows it, and choosing one typically earns better pricing.

How it compares to other loans

The main difference between these loans is how your income is documented. Here is a side-by-side look.

How DSCR loans compare to other loan types
Loan typeHow income is documentedOften a fit for
DSCR loansThe rental income of the property being financedReal estate investors
Conventional loansPay stubs, W-2s, and tax returnsInvestors whose documented income qualifies on its own
Bank statement loansDeposits shown on business or personal bank statementsSelf-employed borrowers, including for a primary residence
Asset depletion loansCalculated from eligible savings, investment, and retirement balancesBorrowers with substantial assets and limited paycheck income

Three things to know before you apply

1

A prepayment penalty is usually optional

Choosing a penalty for selling or refinancing in the first few years typically earns better pricing. You can often shorten it or go without one, so we match it to how long you plan to keep the loan.

2

Reserves are required

Expect to show several months of the property's payment in reserve after closing, and sometimes more if you are a first-time investor.

3

It usually costs more

Rates and down payment requirements are generally higher than on conventional investment loans. The trade is simpler documentation.

Guidelines change. I confirm current requirements with the lender before quoting anything.

Common questions about DSCR loans

Short answers to common questions. Program rules vary by lender, so treat these as general guidance, not a loan decision.

Do you verify my income or job?

No. DSCR loans do not use personal income or employment. Lenders still review your credit, assets, and housing payment history.

Can I close in an LLC?

Yes. I work with lenders that close DSCR loans in an LLC or other entity, usually with a personal guarantee from the owners. A conventional loan generally has to close in your personal name.

Do short-term rentals qualify?

With some lenders, yes. They may use market data or the property's booking history, often with tighter terms than a long-term rental.

Can a first-time investor qualify?

Often, yes. Some lenders want you to already own your home, a few require prior investment experience, and many set tighter terms for first-time investors.

Can I take cash out?

Yes. Cash-out refinances are common with DSCR loans, with lower loan-to-value limits than a purchase.

Where do you offer these loans?

I am licensed in Arizona, Pennsylvania, Florida, and Texas, and I compare DSCR programs across multiple wholesale lenders.

Ready to talk it through?

Pick a time that works for you. We'll go over your goals and next steps, no pressure, just a conversation. Prefer to call or text instead? Reach me directly at (412) 638-4982, or book a quick Zoom if that's easier.