DSCR Loans: The Real Estate Investor's Guide to No-Income-Doc Financing

What Are DSCR Loans?

Debt Service Coverage Ratio (DSCR) loans qualify you based on the property's ability to generate income, not your personal W-2s or tax returns. If the rental income covers the mortgage payment, you can qualify — even with an LLC.

How DSCR Is Calculated

DSCR = Monthly Rental Income ÷ Monthly Mortgage Payment (PITIA)

• DSCR ≥ 1.25: Best rates and terms
• DSCR 1.00-1.24: Qualifies with rate adjustments
• DSCR < 1.00: Some lenders allow down to 0.75 with higher down payment

Example:

• Monthly rent: $2,500
• Monthly PITIA: $2,000
• DSCR = 2,500 ÷ 2,000 = 1.25 ✅

Key DSCR Loan Features

| Feature | Details | |---------|--------| | Down payment | 20-25% typical | | Credit score | 660+ preferred | | Loan amount | $100K - $5M+ | | Property types | 1-4 units, 5+ units, mixed-use | | Vesting | Personal, LLC, Corp, Trust | | Seasoning | 0-6 months (varies) | | Prepayment penalty | 0-5 year options (better rate with PPP) |

Who Benefits Most?

1. Self-employed investors — complex tax returns don't affect qualification
2. Portfolio builders — scale without hitting conventional loan limits (10 properties)
3. LLC purchasers — close in entity name for asset protection
4. High-DTI borrowers — personal DTI doesn't matter

DSCR Market Opportunity by County

Based on our market data, high-opportunity DSCR markets include:

• Harris County, TX: Median rent-to-price ratio favors cash flow
• Maricopa County, AZ: Strong population growth driving rental demand
• Duval County, FL: Low entry prices with solid rental yields

"DSCR loans are the fastest-growing product in our pipeline. Investors love that we don't need their tax returns — just the deal." — Sam Tehranchi, Custom Mortgage Inc.

Custom Mortgage Inc. is licensed in AZ, CA, FL, GA, TX. NMLS #268582.