DSCR Loans offer flexible, income-based real estate financing for investors 


What is a DSCR Loan?



A DSCR loan (Debt Service Coverage Ratio loan) is a specific type of real estate financing mainly for investors, not owner-occupants. 

It assesses whether a property produces enough income to cover its debt payments, not the borrower’s personal income.


DSCR loans support both business growth and personal wealth-building by focusing on property performance rather than personal income


  • Individual Investors
    Seeking passive income through rental properties without relying on personal income documentation 
  • Self-Employed Real Estate Investors 
    Entrepreneurs and independent investors who may not have conventional W-2 Income but have strong property Cash Flow 
  • Investors with Complex or Multiple Income Streams 
    Those with layered financial portfolios, including rental income, business revenue, or other non-traditional sources 
  • LLCs, Corporations, and Other Entity Borrowers
    Business structure investing in real estate that preger asset-based lending for scalability and tax advantages




DSCR loans offer speed, scalability, and flexibility without requiring personal income documentation

  • No W-2s, pay stubs, or tax returns  — qualification is based on property performance.
  • Faster approval — less documentation and underwriting.
  • Scalable — supports multiple properties and portfolio growth
  • Flexible ownership — allows for LLC or corporate ownership
  • Qualification could be based on market rents, not just current leases, depending on the program 
  • Higher loan amounts and cash-out options

Understanding how DSCR is calculated helps investors assess property viability and secure financing confidently.

1

Positive Cash Flow 

  • Monthly Gross Income in rent = $3,000
  • Monthly Operating Expense = $800
  • Net Operating Income (NOI) = $2,200
  • Monthly Principal, Interest, Taxes, Insurance, and Associations Dues (PITIA) = $1,500

DSCR = $2,200 (NOI)/$1,500 (PITIA) = 1.47

The property generates 47% more income than needed to cover debt service. Should be approved. 
2

Break-Even Cash Flow

  • Monthly Gross Income in rent = $2,500
  • Monthly Operating Expense = $1,000
  • Net Operating Income (NOI) = $1,500
  • Monthly Principal, Interest, Taxes, Insurance, and Associations Dues (PITIA) = $1,500


DSCR = $1,500 (NOI)/$1,500 (PITIA) = 1.00

The property’s income exactly covers the debt service. There’s no cushion for unexpected expenses or vacancies.   

3

Negative Cash Flow 

  • Monthly Gross Income in rent = $2,000
  • Monthly Operating Expense = $700
  • Net Operating Income (NOI) = $1,300
  • Monthly Principal, Interest, Taxes, Insurance, and Associations Dues (PITIA) = $1,500


DSCR = $1,300 (NOI)/$1,500 (PITIA) = .87

The property does not generate enough income to cover debt service. This could be risky for lenders and investors. It may be denied or requiered additional conditions.

Successful DSCR approval depends on streamlined documentation focused on property performance and investor readiness

  • Lease Agreements or Rent Roll 
  • Appraisal with Rental Comps
  • Financial Statements for proof of reserves
  • Proof of Property Insurance
  • Existing Debts on the property
  • Proof of Investment Experience (e.g.,  rental income statements, rental agreements, financial statements, etc.)


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