Frequently Asked Questions
Everything you need to know about DSCR loans and investment property financing.
What is a DSCR loan?
A DSCR loan is a measure of the cash flow a borrower has to pay against current debt obligations for an investment property, qualifying based on rental income rather than personal income.
What is the minimum DSCR required to qualify?
Most lenders want to see a DSCR of at least 1.2, which shows the property earns enough to cover its debt. However, our program has no minimum DSCR requirement.
Do DSCR loans impact your credit report?
DSCR loans are typically not reported to personal credit bureau accounts and therefore do not affect your DTI when applying for a conventional loan.
What types of properties can be financed?
DSCR loans can finance 1-4 unit properties, condos, townhomes, multifamily properties up to 100 units, and commercial properties.
What documents are needed for a DSCR loan?
You won't need income statements or W2s, but you'll need property details, current or projected rental income documentation, and basic borrower information.
What is the maximum LTV ratio?
DSCR loans typically offer up to 80% LTV, depending on the property type and location.
What is the minimum credit score required?
Most lenders require a minimum credit score of 660, with better terms available for scores of 720 or higher.
Can DSCR loans be used for short-term rentals?
Yes, DSCR loans can be used for both short-term and long-term rental properties.
How is DSCR calculated?
DSCR is calculated by dividing the property's annual net operating income by its annual mortgage debt service.
Are there reserve requirements?
Many DSCR lenders require reserves, often 6-12 months of PITIA (Principal, Interest, Taxes, Insurance, and Association fees) payments.
How long does it take to close?
Our DSCR loans typically close in as little as 10 business days, significantly faster than traditional loans.
Can foreign nationals qualify?
Yes, some DSCR loan programs are available to foreign nationals investing in U.S. properties.
Are there prepayment penalties?
Some DSCR loans may have prepayment penalties for the first 2-5 years. Terms vary by program.
Can DSCR loans be used for refinancing?
Yes, DSCR loans can be used for both purchase and refinance transactions, including cash-out refinancing.
How do vacancy rates affect approval?
Lenders typically factor in vacancy rates when calculating DSCR - usually 25% for short-term rentals and 5-10% for long-term rentals.