What Is a DSCR Loan?

DSCR stands for Debt Service Coverage Ratio.

A DSCR loan is commonly used by real estate investors to qualify for financing based on the property’s income potential rather than their personal income.

Instead of using tax returns or employment income, lenders evaluate whether the property’s market rent covers the proposed mortgage payment.

There are several DSCR options available, including:

• long-term rental DSCR loans
• short-term rental (Airbnb/STR) programs
• no-ratio investor loans
• low DSCR options down to 0.75

Some lenders also allow qualification using an active lease agreement and security deposits already in place.

No-ratio loan options are available as well, although these programs generally carry higher rates due to increased risk.