DSCR (Investor Cash Flow) in Palo Alto, CA

What Is a DSCR Loan?

A DSCR loan qualifies investors based on the property's rental income relative to its mortgage payment. The ratio is calculated as Monthly Rent / Monthly PITIA (Principal, Interest, Taxes, Insurance, Association dues). A DSCR of 1.0x means rent covers the payment; 1.25x means rent exceeds it by 25%. Most lenders require a minimum 1.0x, though some programs allow 0.75x for strong borrowers. CMRE underwrites DSCR for both residential (1-4 unit) and commercial (5+ unit) properties. DSCR loans account for the fastest-growing segment of the Non-QM market, with origination volume increasing 40% year-over-year.

How DSCR Is Calculated

• •DSCR = Monthly Gross Rent / Monthly PITIA (Principal + Interest + Taxes + Insurance + HOA).
• •Example: $3,000 rent / $2,400 PITIA = 1.25x DSCR — qualifies.
• •For STRs: CMRE uses trailing 12-month average from Airbnb/VRBO or a 1007 market rent schedule.
• •Multi-unit: total rent from all units used in calculation.
• •CMRE accepts ratios as low as 0.75x for 740+ FICO with 30%+ down.

DSCR vs. Conventional Investment Property Loans

• •Conventional investment loans require full income docs (W-2s, tax returns, DTI) and cap at 10 financed properties.
• •DSCR requires zero personal income docs and has no property count cap.
• •Conventional rates are 0.5%-1.0% lower, but DSCR offers far more flexibility.
• •DSCR allows LLC/Corp vesting; conventional requires personal name on title.
• •Professional investors with 10+ properties often have no choice but DSCR.

CMRE Commercial DSCR Programs

CMRE extends DSCR lending beyond 1-4 units into commercial territory. Commercial DSCR programs cover 5+ unit apartments, mixed-use (retail/residential), office buildings, and light industrial. Commercial DSCR loans range from $500K to $5M with terms up to 30 years. Underwriting uses net operating income (NOI) instead of gross rent, and minimum DSCR ratios are 1.20x-1.25x. Available to LLCs, corporations, and experienced investors with portfolios of any size.

Airbnb and Short-Term Rental DSCR Loans

CMRE finances short-term rental properties through specialized DSCR programs. For properties with existing STR history, CMRE uses trailing 12-month average rental income from the platform. For new acquisitions without history, CMRE accepts a 1007 market rent schedule from a licensed appraiser or AirDNA comparable data. STR DSCR loans require minimum 25% down, 680 FICO, and 6 months PITIA reserves.

DSCR Loan Rates vs. Conventional Investment Loan Rates

• •DSCR rates premium: Typically 0.5%–1.5% above a 30-year conventional investment loan rate.
• •Reason for premium: Reduced documentation (no personal income) is priced into the rate — not a credit quality indicator.
• •760 FICO + 1.25x DSCR + 70% LTV: Closest rate to conventional — approximately 0.5% premium.
• •700 FICO + 1.0x DSCR + 75% LTV: Moderate premium — approximately 0.75%–1.0% above conventional.
• •660 FICO + 0.75x DSCR + 75% LTV: Higher premium — approximately 1.25%–1.5% above conventional.
• •Key DSCR advantages vs. conventional despite rate premium: No income docs, no DTI limit, no 10-property cap, no tax returns, LLC vesting, close in 14–21 days.
• •Portfolio investors: After acquiring 10+ properties at DSCR rates, the blended rate impact vs. conventional is typically less than 0.5% — a small price for unlimited scale.

How to Apply for a DSCR Loan with CMRE

• •Step 1: Submit property details — address, purchase price, estimated rent, and property type.
• •Step 2: CMRE runs DSCR analysis using actual or projected rent vs. estimated PITIA.
• •Step 3: Credit check and entity documentation (LLC operating agreement if applicable).
• •Step 4: Appraisal ordered with 1007 rent schedule to verify market rent.
• •Step 5: Underwriting — average 5-7 business days.
• •Step 6: Close in 21-30 days. Fund in entity name.