DSCR Loans (Residential)

One-line summary: Investor-property loans that qualify on the rental income of the property rather than the borrower’s personal income, the standard option for residential rental investors building a portfolio.

Best for

Real estate investors purchasing or refinancing 1–4 unit rental properties who want to qualify on the property’s cash flow without using personal income documentation. Particularly valuable for investors with multiple rentals already on their personal tax return, where conventional financing runs into loan-count or DTI limits.

Key terms (typical)

Attribute	Typical Range
Eligible properties	1–4 unit investment properties
Income documentation	None required, qualifies on property rent vs. PITIA
DSCR minimum	0.75x to 1.25x lender-dependent; lower DSCR = higher rate / lower LTV
Down payment	20–25% typical
Credit score	660+ typical; 700+ for best terms
Loan amount	$100K to $3M+
Term	30 years fixed; 5/1, 7/1, 10/1 ARM options
Prepayment	Often 5- or 3-year step-down prepayment penalty
Borrower	LLC or personal, most programs accept entity borrowers

Why borrowers choose this program

• No personal income required. No tax returns, W-2s, or DTI calculation. Each property qualifies on its own cash flow.
• No loan count limits. Conventional caps investor loans at 10 financed properties. DSCR programs typically have no such limit, allowing portfolio scale.
• LLC borrowing. Most DSCR lenders prefer or require entity borrowers, keeping the assets and personal credit clean.
• Fast close. Less documentation means faster underwriting, 21–30 day closes are common.

Considerations

• Higher rates than conventional investor financing. DSCR programs typically price 100–250 basis points above conventional investment loans. The premium pays for the documentation flexibility.
• Prepayment penalty. Most DSCR loans carry 3- to 5-year step-down prepayment penalties. Plan the hold accordingly.
• DSCR threshold matters for pricing. Loans at 1.0x or below DSCR cost more and may have LTV restrictions. Properties with 1.25x DSCR or better get the best pricing.
• Larger down payment than primary residence. 20–25% down is standard.