What is a DSCR Loan and Who Qualifies?

If you're a real estate investor, you've probably heard the term DSCR loan thrown around. But what exactly is it, and could it be the right financing solution for your next investment property?

What Does DSCR Stand For?

DSCR stands for Debt Service Coverage Ratio. It's a calculation that lenders use to determine whether a property generates enough rental income to cover its mortgage payments.

The formula is simple: DSCR = Monthly Rental Income ÷ Monthly Mortgage Payment

A DSCR of 1.0 means the property breaks even. Most lenders look for a DSCR of 1.1 or higher.

Why DSCR Loans Are Different

Traditional mortgages require W2s, tax returns, and proof of personal income. For real estate investors — especially self-employed borrowers or those with multiple properties — this can be a nightmare.

DSCR loans eliminate that problem entirely. Instead of looking at your personal income, lenders evaluate the property's cash flow. If the rent covers the mortgage, you qualify.

Who is a DSCR Loan Perfect For?

Self-employed investors with complex tax returns, investors with multiple properties, borrowers who write off significant expenses, and anyone who wants to keep personal and investment finances separate.

What Properties Qualify?

Single family rentals, condos, 2-4 unit properties, multifamily (5+ units), and short term rentals.

What Are Typical DSCR Loan Terms?

Loan amounts typically range from $100,000 to $5 million. Most lenders require a minimum credit score of 620-660. Down payments are typically 20-25%. Rates are slightly higher than conventional loans but the flexibility and speed make it worthwhile for most investors.

How to Get Started

At Jordan Lev Mortgage we specialize exclusively in investor lending. No tax returns required. Fast closings. Clear communication at every stage. We work with investors across the country from our Boca Raton FL office.

Submit your deal at jlwmtg.com or call 717-586-5144 to discuss your scenario today.