DSCR Purchase Loans
A DSCR purchase loan is a business-purpose loan used to acquire an investment property. Instead of relying primarily on personal employment income, eligible programs may evaluate the property’s qualifying rental income relative to its monthly debt and housing expense. Program terms and eligibility vary by lender, property, borrower, and jurisdiction.
Who It's For
- Investors buying a single-family, condo, or 2–4 unit rental property
- Borrowers who prefer qualifying with property cash flow rather than personal income
- Investors purchasing in the name of an LLC or other eligible entity
- Buyers building or expanding a rental portfolio
Common Uses
- Acquiring a long-term rental property
- Purchasing a property already generating lease income
- Adding a property to an existing investment portfolio
Qualification Overview
- Eligible DSCR programs generally compare the property’s qualifying rental income to its monthly housing expense (often principal, interest, taxes, insurance, and any HOA dues).
- Borrower credit, the property, leverage, and reserves are typically reviewed alongside the property’s cash flow.
- Exact qualifying methods, ratios, and requirements vary by program and investor and are confirmed during underwriting.
Common Variables
- Property type and condition
- Qualifying rental income and lease documentation
- Loan purpose and leverage
- Borrower credit profile and experience
- Entity vesting (individual vs. LLC)
Eligible Property Types
- Single-family rentals
- Condominiums (eligible projects)
- 2–4 unit properties
- Certain short-term rentals (program-dependent)
Common Documentation
- Entity documents when vesting in an LLC
- Lease or market-rent support (program-dependent)
- Property insurance information
- Standard identity and transaction documentation
Loan Purpose
Business-purpose investment property financing. These loans are not consumer mortgages for a primary residence.
Potential Advantages
- May not rely on personal W-2 income to calculate qualifying income
- LLC / entity vesting available on many programs
- Streamlined process for experienced investors
Potential Considerations
- Business-purpose programs may include prepayment penalty structures
- Terms, leverage, and pricing vary by program and scenario
- Property cash flow and condition can affect eligibility
Frequently Asked Questions
- Do DSCR purchase loans require W-2 income?
- On many DSCR programs, personal W-2 income is not used to calculate qualifying income. Borrower documentation, credit review, and property review are still typically part of the process. Requirements vary by program and investor.
- Can I purchase in an LLC?
- LLC or entity vesting is available on many eligible programs. Specific documentation and any personal guaranty terms vary by loan program and investor guidelines.
- What DSCR ratio do I need to purchase?
- Required or preferred DSCR ratios vary by program, property type, and leverage. A scenario review helps identify which programs a property may fit.
Program details are general and for educational purposes only. This is not a commitment to lend, an offer, or specific loan terms. All programs are business-purpose investor loans subject to underwriting, property review, investor guidelines, and applicable law. Availability, eligibility, and terms vary by state and transaction. Simple DSCR is an assumed business name of WooHoo Mortgage LLC, NMLS #2347993.