DSCR Loan for Investment Properties

DSCR Loan / No Ratio Loan

Investor's qualify using the cash-flow of the property. No pay-stubs, W-2's or tax returns are required. Infact, the entire income and employment section on the application is left blank.
A Debt Service Coverage Ratio (DSCR) loan program is a financing option commonly used in real estate. Unlike traditional loans that rely on the borrower’s personal income, DSCR loans focus on the property’s cash flow and income. Here’s how they work:
Property Evaluation: Instead of assessing your income, lenders evaluate the property’s ability to generate enough income to cover its debt obligations.
DSCR Calculation: The DSCR measures the property’s annual gross rental income against its annual mortgage debt (including principal, interest, taxes, insurance, and HOA fees). A DSCR ratio above 1.0 indicates positive cash flow and a DSCR ratio below 1.0 indicates negative cash flow.
The DSCR Formula: Annual Debt (PITI + HOA) / Annual Gross Rental Income​
Annual Gross Rental Income: Based on lease agreements or appraiser’s comparable rent schedule. Annual Debt: Total annual PITI payments (principal, interest, taxes, insurance, plus HOA).
No Personal Income Required: DSCR loans allow real estate investors to qualify without submitting tax returns or W-2s. They’re especially useful for investment properties.
Investment Opportunities: With DSCR loans, you can expand your investment portfolio more easily.