Loan Programs

What is a DSCR Loan and How Does It Work?

Last updated: November 18, 2025by LoanGuys.com Team

DSCR (Debt Service Coverage Ratio) loans are designed specifically for real estate investors who want to qualify based on rental income, not personal income or tax returns.

Instead of reviewing W2s or pay stubs, lenders look at how well the property’s rental income covers its mortgage payment.

This makes DSCR loans ideal for self-employed borrowers, landlords, and property investors.

🧮 How DSCR Is Calculated

The DSCR formula is simple:

DSCR = Gross Monthly Rent ÷ Monthly Mortgage Payment

Example:

  1. Monthly Rent: $2,000

  2. Mortgage Payment (PITI): $1,500

  3. DSCR = 1.33

That means the property generates 33% more income than the mortgage payment, showing lenders it can support itself.

Keep your DSCR above 1.0 to ensure your rental income fully covers your loan payment.

✅ Key Benefits of a DSCR Loan

  • No income verification required – approval is based on property cash flow, not tax returns.

  • LLC or personal ownership allowed – perfect for both individual and portfolio investors.

  • Finance multiple properties – scale your portfolio faster without W-2 limits.

  • Fast closings – less documentation and quicker approvals than traditional loans.

  • Flexible loan terms – choose between 30-year fixed, ARM, or interest-only options.

🏠 Eligible Property Types

You can use a DSCR loan to finance:

  • Single-family homes

  • Condos and townhomes

  • 2–8 unit multifamily properties

  • Short-term rentals (Airbnb, VRBO)

💡 Ideal Borrowers

DSCR loans are a great fit if you are:

  • A real estate investor expanding your rental portfolio

  • Self-employed or own multiple LLCs

  • Looking to refinance or pull equity from an existing investment

  • Purchasing properties with rental or Airbnb income potential

⚡ Why Investors Choose LoanGuys.com

At LoanGuys.com, we specialize in investor-focused lending.

We understand that your ability to find, fund, and grow investment properties depends on speed, flexibility, and expertise — not traditional bank red tape.

When you apply with LoanGuys.com, you’ll get:

  • Access to the whole of market – dozens of DSCR lenders

  • A dedicated loan advisor to guide you from application to funding

  • Fast, simple approvals with investor-friendly underwriting

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