DSCR Loan Requirements
AAPL Member · Direct Lender Since 2016 · NMLS #1979189
The whole appeal of a DSCR loan is what it doesn’t ask for. There’s no W-2, no tax return, no employer verification, and no debt-to-income ratio that gets worse with every property you add. A DSCR loan qualifies on the rental property’s income rather than yours, so the requirements center on the property and the deal, not your personal finances. If you’ve been told you “have too many mortgages” to get another conventional loan, this is the product built for you. Here’s what it actually takes to qualify, from a direct lender that’s funded DSCR loans since 2016.
DSCR stands for Debt Service Coverage Ratio — the property’s rent divided by its mortgage payment. That ratio is the heart of every requirement below, so it’s worth understanding before the rest makes sense.
The Core Requirement: The Property Pays for Itself
We take the property’s monthly rent and divide it by the full monthly mortgage payment — principal, interest, taxes, insurance, and any HOA dues (PITIA). The result is the DSCR. A ratio of 1.0 means the rent exactly covers the payment; above 1.0 means it covers it with room to spare and earns better pricing and leverage.
Here’s the part most lenders won’t match: we have no minimum DSCR. We finance properties that come in below 1.0, where the rent doesn’t fully cover the payment. Those deals are simply structured with a larger down payment, more reserves, or a slightly higher rate to offset the gap. So the real “requirement” isn’t a magic ratio — it’s a property whose income, current or projected, supports a fundable structure. For a short-term rental, that income can be the projected or actual STR revenue, which is how an Airbnb loan qualifies.
Down Payment and Leverage
DSCR loans are long-term financing, so leverage is more conservative than hard money. We typically lend up to 80% of value on a purchase and 75% on a cash-out refinance, which means a down payment of roughly 20–25% on a purchase or equivalent retained equity on a refinance. A stronger DSCR and stronger credit move you toward the higher end of that leverage; a sub-1.0 ratio moves you toward a larger down payment. There’s no maximum number of properties — you can finance as many as the individual deals support.
Credit: Pulled, but No Minimum
We run a hard credit report, but there is no minimum credit score. As with all our products, a lower score doesn’t disqualify you; it’s reflected in your rate, leverage, and reserves. The property’s income is doing the heavy lifting in the underwriting, so a strong-cash-flowing rental with imperfect credit is very fundable. Stronger credit simply earns better pricing and a few more points of LTV.
Reserves and the Entity
Because this is a long-term loan on a rental, we want to see reserves — typically a few months of payments in liquidity — so the property can weather a vacancy or a repair without missing a beat. You’ll close in an LLC, corporation, or LP in most cases; DSCR loans are business-purpose loans secured by the property, so entity ownership is fully supported and usually preferred for liability protection and cleaner portfolio accounting. A loan closed in your LLC’s name also generally won’t appear on your personal credit report.
DSCR Loan Requirements at a Glance
DSCR Loan Requirements at a Glance
What You'll Need to Provide
The documentation is light and property-focused. Expect to provide the purchase contract (or proof of ownership on a refinance), a lease or a rent estimate — a market rent appraisal (Form 1007) for a vacant property, or a signed lease where one exists — your entity documents, proof of funds for the down payment and reserves, and basic insurance information. No tax returns, no pay stubs, no employment letters. Our loan document checklist covers the full list, and our DSCR loan program page lets you model your ratio before you apply. Compare where pricing sits on our DSCR loan rates today page.
Frequently Asked Questions
There isn’t one. We prefer to see a ratio of 1.0 or better, where the rent fully covers the payment, but we have no minimum DSCR and we finance sub-1.0 properties with a larger down payment, more reserves, or a higher rate to offset the shortfall.
There’s no minimum credit score. We pull a hard credit report, but a lower score doesn’t disqualify you — it’s reflected in your rate, leverage, and reserves. The property’s rental income carries the underwriting.
No. A DSCR loan qualifies on the property’s rent rather than your personal income, so there are no tax returns, W-2s, or pay stubs. This is what lets investors keep growing past the point where conventional debt-to-income limits would stop them.
Generally around 20–25% on a purchase, since we lend up to 80% of value, and a bit more equity on a cash-out refinance, where we lend up to 75%. A stronger DSCR and credit profile move you toward the higher leverage.
Yes, and most investors do. DSCR loans are business-purpose loans secured by the property, so closing in an LLC is fully supported and usually recommended for liability protection. You’ll provide basic entity documents during underwriting.
Wondering if your rental qualifies?
Tell us the property and the rent. We qualify the property’s cash flow — not your tax returns — and we’ll tell you fast.