Unlocking the Power of a DSCR Home Loan

Features of a DSCR Loan

1. Qualification Based on Property Cash Flow

   • Approval is based on the property’s income potential—not your personal income.

   • The key metric is the Debt Service Coverage Ratio (DSCR), which compares the property’s net operating income (NOI) to the proposed debt payment.

2. Flexible DSCR Requirements

   • Many lenders accept a DSCR as low as 1.0, meaning the property’s income just covers the debt.

   • Some lenders even allow lower ratios for strong borrowers or higher down payments.

3. No Tax Returns or W-2s Needed

   • Ideal for self-employed investors or those with complex finances.

   • Streamlined documentation—usually just a lease agreement and property income report.

4. Available for a Variety of Property Types

   • Single-family rentals

   • Multi-unit residential (2–4 units)

   • Short-term rentals (Airbnb, VRBO) depending on lender guidelines

5. Competitive Terms

   • Fixed or adjustable interest rates

   • Options for interest-only payments

   • Loan terms ranging from 5 to 30 years

6. Entity Ownership Allowed

   • Can be closed in the name of an LLC or corporation—protecting personal liability and aiding with estate planning or investment structuring.

Benefits of a DSCR Loan

1. Investor-Friendly Financing

   • You can scale your portfolio more easily since loans are based on the property’s performance, not your personal DTI (Debt-to-Income) ratio.

2. Faster Closings

   • Reduced paperwork and income verification means a quicker underwriting process.

3. More Loan Options for Non-Traditional Borrowers

   • Great for investors who don’t qualify through conventional financing due to high write-offs, multiple properties, or non-W-2 income.

4. Helps Leverage Rental Income

   • Allows you to maximize your buying power using the property’s cash flow.

5. Focus on Investment Performance

   • Encourages better purchasing decisions based on actual or projected rental income.

6. Privacy and Asset Protection

   • Closing under an LLC shields personal information and can offer legal/tax advantages.