How it works
DSCR stands for debt service coverage ratio. It compares the property's monthly rent to its monthly payment (principal, interest, taxes, insurance, and any HOA dues). If the rent covers the payment, the property may qualify. Many programs look for rent at or above the payment, and some allow less with a larger down payment.
Who it's a good fit for
- Investors who write off a lot of expenses, so their tax returns show less income
- Self-employed investors
- Investors who own several properties and want a simpler process
Good to know
- DSCR loans are for investment properties only, not homes you live in.
- Down payments are usually larger than for a home you live in.
- Long-term leases are the simplest way to show rent. Short-term rental income may be counted differently.
What to have ready
The property address, current leases or expected rent, and the purchase contract or current mortgage statement.
Frequently asked questions
Do I need to show my personal income?
Usually not. The property's rent does the qualifying.