Frequently Asked Questions
Straight answers about DSCR and business-purpose investor financing. Availability, terms, and requirements vary by lender, program, property, and state.
- What is a DSCR loan?
- A DSCR (Debt Service Coverage Ratio) loan is a business-purpose loan for real estate investors. Certain DSCR programs may use a property’s qualifying rental income rather than traditional W-2 income for qualification. Program calculation methods and requirements vary by lender and loan program.
- How is DSCR calculated?
- DSCR generally compares a property’s qualifying monthly rental income to its monthly housing expense (often principal, interest, taxes, insurance, and any HOA dues — PITIA). For example, $3,200 in rent against a $2,420 monthly expense is roughly a 1.32x DSCR. Exact calculation methods vary by program and investor.
- Do DSCR loans require W-2 income?
- On many DSCR programs, personal W-2 income is not used to calculate qualifying income. This does not mean no documentation is required — borrower documentation, credit review, and property review are still typically part of the process. Requirements vary by program and investor.
- Can I close in an LLC?
- LLC or entity vesting is available on many eligible programs. Specific requirements, documentation, and any personal guaranty terms vary by loan program and investor guidelines.
- Can I finance a short-term rental?
- Program options may be available for eligible short-term rental properties such as Airbnb and VRBO. How income is evaluated can differ from long-term rentals and varies by program.
- What DSCR ratio is generally required?
- Required or preferred DSCR ratios vary by loan program, property type, leverage, and borrower profile. A scenario review helps identify which programs a property may fit.
- Can I get a DSCR loan with a DSCR below 1.00?
- Some programs may consider properties with a DSCR below 1.00, often with adjustments to terms or leverage. Eligibility is subject to underwriting and investor guidelines and is evaluated on a scenario basis.
- Can I cash out a rental property?
- Cash-out refinancing may be available on eligible properties. Available proceeds, leverage, and terms are subject to property value, program guidelines, and underwriting.
- Are DSCR loans available for first-time investors?
- Some programs may be available to newer investors, while others prefer prior ownership or landlord experience. This varies by program and is evaluated during scenario review.
- What credit score is required?
- Minimum and preferred credit profiles vary by loan program and investor. Credit is one of several factors reviewed alongside the property and the overall scenario.
- Are there prepayment penalties?
- Many business-purpose investor loan programs include prepayment penalty structures, which vary by program and can sometimes be adjusted. Any applicable terms are disclosed as part of the loan process.
- Can foreign nationals qualify?
- Certain programs may be available to foreign national investors with additional documentation requirements. Eligibility varies by program and investor guidelines.
- What types of properties can be financed?
- Eligible property types can include single-family rentals, condos, 2–4 unit properties, 5+ unit multifamily, short-term rentals, and certain commercial and mixed-use properties. Eligibility is subject to program and property review.
- What states do you lend in?
- Lending availability depends on licensing and investor program availability. We do not represent authorization in states where we are not licensed or approved. Contact us to confirm availability for your scenario.
- How quickly can a DSCR loan close?
- Timelines depend on the program, property, appraisal or property review, documentation, and underwriting. We work to move efficiently once a scenario is in review, but we do not guarantee a specific closing time.
Still have a question?
Talk through your specific scenario with our team.