DSCR Loans (Multifamily)

One-line summary: Investor loans that qualify on the property’s cash flow instead of the borrower’s personal income, available for 1–4 unit residential rentals, and up to 10 units through specialized commercial DSCR programs.

Best for

Investors who want to scale a rental portfolio without traditional income documentation, self-employed borrowers whose tax returns don’t reflect their actual cash flow, and operators who own multiple investment properties and need to qualify each deal independently of personal DTI calculations.

Key terms (typical)

Attribute	Typical Range
Eligible properties	1–4 unit residential rentals (up to 10 units via specialized commercial programs)
Loan amount	$75,000 to $3 million+ (varies by lender)
Loan-to-value (LTV)	Up to 80% (purchase), 75% (refinance)
Debt service coverage (DSCR)	0.75x to 1.25x minimum, lender-dependent (lower DSCR = higher rate)
Term	30 years typical; some 5/1, 7/1, 10/1 ARMs
Rate type	Fixed or ARM
Recourse	Recourse to the borrowing entity; personal guaranty typical
Prepayment	Step-down prepayment common (5-4-3-2-1 or similar)
Income documentation	None required, qualifies on rent / market rent

Why borrowers choose this program

• No personal income documentation. No tax returns, no W-2s, no DTI calculation. The property qualifies, not your tax return.
• Portfolio-friendly. Each loan stands on its own. You can build a portfolio of 10, 20, or more properties without running into conventional loan count limits.
• Faster close. Less documentation means faster underwriting, typical close in 30 days or less.
• Available for LLCs and entities. Most DSCR lenders prefer entity borrowers, which keeps the assets and the borrowing structure clean.

Considerations

• Higher rates than conventional. DSCR loans typically price 100–250 basis points above conventional investor financing. The premium pays for the documentation flexibility.
• Prepayment penalties. Most DSCR loans carry prepayment penalties in the first 3–5 years. Plan the hold accordingly.
• DSCR threshold matters. Loans at minimum DSCR (1.0x or below) cost more and may have lower LTV caps. The strongest pricing goes to deals with 1.25x DSCR or better.