DSCR Loans — Complete Guide — A DSCR (Debt Service Coverage Ratio) loan is a rental property mortgage that qualifies based on the property's projected rental income — not your W-2, tax returns, or DTI. Standard programs require minimum DSCR of 1.0x, 660 FICO, 80% LTV. No-ratio DSCR programs exist for borderline deals.
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Everything you need to know about DSCR loans — what they are, how to qualify, what the ratio means, and how to use them to build a rental portfolio without W2 income.
A DSCR loan — Debt Service Coverage Ratio loan — is a type of investment property mortgage that qualifies borrowers based on the property's rental income rather than the borrower's personal income. No W2 required. No tax returns. No pay stubs. Your property's cash flow is the qualifier.
This makes DSCR loans the preferred financing tool for self-employed investors, full-time landlords, and anyone whose personal income doesn't reflect their actual financial strength.
If the property generates enough rental income to cover the mortgage payment — you qualify. That's it. Your personal income doesn't enter the equation.
DSCR stands for Debt Service Coverage Ratio. It's a simple formula:
Most lenders require a minimum DSCR of 1.0x to 1.25x. At LendingStreet our minimum is 1.0x — meaning the rent just needs to cover the mortgage. We also offer a No Ratio DSCR program with no minimum at all.
This is where DSCR loans differ dramatically from conventional mortgages. You do NOT need:
What you typically DO need:
Yes — and this is one of the biggest advantages of DSCR loans. Conventional mortgages require the loan to be in your personal name. DSCR loans allow you to hold the property in an LLC or other business entity from day one, providing liability protection and cleaner business accounting.
As few as 10 days. Conventional bank loans take 30–45 days. DSCR loans are streamlined — no income verification means fewer documents and a faster process. Our record is 7 business days from application to funded.
If your property doesn't cash flow at 1.0x — or if your income is too complex to document — our No Ratio DSCR program removes the income requirement entirely. No DSCR minimum. No income docs. Just 640+ credit and up to 85% LTV.
| Requirement | Conventional | LendingStreet DSCR |
|---|---|---|
| W2 / Pay Stubs | Required | Not Required |
| Tax Returns | 2 Years Required | Not Required |
| Close in LLC | Not Allowed | Allowed |
| Time to Close | 30–45 Days | As Few as 10 Days |
| Qualification Basis | Personal Income | Property Cash Flow |
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A DSCR loan is a rental property mortgage that qualifies on the property's income instead of the borrower's personal income. The lender divides gross monthly rent by the full monthly payment — principal, interest, taxes, insurance and HOA — to get the debt service coverage ratio. No W-2, no tax returns, no debt-to-income calculation.
Gross monthly rent divided by total monthly debt service including principal, interest, taxes, insurance and any HOA dues. Rent of $2,400 against a $2,200 payment is a DSCR of roughly 1.09. Taxes and insurance sit inside the denominator, which is why the same purchase price and rent can pass in one state and fail in another.
Most capital sources set the minimum at 1.0, meaning rent exactly covers the payment. Some write below 1.0 with compensating factors such as more equity or stronger credit, and no-ratio programs set the requirement aside entirely at reduced leverage.
Each capital source sets its own floor and credit interacts with leverage rather than acting as a hard cutoff. Lower scores are frequently workable at lower leverage. Programs exist below 660 at some sources and not others.
Yes. DSCR loans qualify on the subject property's income potential, not your history as a landlord. When a property is vacant, most capital sources underwrite to market rent supported by the appraiser's rent schedule.
Yes, and most capital sources prefer it because entity vesting confirms the loan is business purpose. Expect to provide the operating agreement, articles of organization, an EIN, and a personal guaranty from the members.
Leverage varies by capital source, credit, ratio and property type, and purchases generally allow higher leverage than cash-out refinances. Plan for reserves on top of the down payment and closing costs — reserves are where most first DSCR purchases come up short.
Typically 21 to 30 days. The timeline is driven by appraisal turnaround and title rather than by underwriting, since there is no income documentation to verify.
Yes. Some capital sources underwrite projected short-term rental revenue from comparable listing data, while others require twelve months of operating history. This varies enough between sources that it should be confirmed before purchase.
Single-family and 2-to-4 unit residential are broadly accepted. Condotels, non-warrantable condos, rural property, manufactured housing and 5-to-8 unit buildings are accepted by some capital sources and excluded outright by others.