No Ratio DSCR loans remove the income coverage requirement. Useful in expensive markets, value-add plays, and conversions.
Get a Rate Quote →Standard DSCR loans require the property's rental income to cover the mortgage payment (DSCR ≥ 1.0x, ideally 1.20x+). In some markets, that's impossible — rents have risen but not as fast as prices, and at current mortgage rates, cap rates no longer cover debt service.
No Ratio DSCR removes the ratio requirement. The lender qualifies you on the property's value, your credit, and your reserves — not its monthly income coverage. Rates are higher to compensate for the missing safety net.
SF Bay Area, NYC, Seattle, LA, Boston, Honolulu — markets where cap rates are 3-4% but mortgage rates are 6-7%. Properties don't cash flow on day one; investors buy for appreciation and future rent growth.
You're buying an underperforming property where current rent is way below market. Immediately after closing, you'll raise rents through renovation, property improvements, or lease turnover. Standard DSCR underwrites current rent; No Ratio lets you buy based on future potential.
Long-term rental income wouldn't cover the debt, but you're converting to STR where revenue will be significantly higher. No Ratio lets you close without proving the STR income stream first.
Property has no current tenant (just purchased, mid-turnover, etc.). Standard DSCR may require lease in place; No Ratio skips the income proof entirely.
No Ratio is a premium product. Expect:
The math works when appreciation or rent growth expectations justify the higher borrowing cost. On a $1M loan, a 1% rate difference is $833/month or $10K/year — if you expect 5%+ annual appreciation, the cost is easily covered.
Property: 4-unit building in Oakland, CA. Purchase $1.6M. Current gross rent $6,200/month (below market).
Standard DSCR test: $6,200 monthly rent vs ~$10,500 monthly payment (at 75% LTV). DSCR = 0.59x. Fails standard DSCR minimum of 1.00x.
No Ratio DSCR: Approved at 70% LTV ($1.12M loan) based on property value, borrower credit (740 FICO), and reserves (12 months PITIA). Rate: 7.25%.
Outcome: Investor closes, gradually raises rents through unit turnover to market rate ($9,500/month). After 18 months, property easily cash flows and can be refinanced to standard DSCR at better terms.
A DSCR loan that doesn't require a DSCR calculation. The lender funds based on property value (LTV) alone rather than measuring rental income coverage. Useful when the property can't support a 1.0+ DSCR ratio at current rates — like in high-appreciation markets where cap rates have compressed.
When the property can't pencil at standard DSCR (ratio below 1.0x at current rates). Common in expensive markets (SF Bay Area, NYC, Seattle, LA) where cap rates are 3-4% and mortgage rates are 6%+. Or when buying properties you plan to improve significantly post-closing.
Yes — typically 0.5-1.5% above standard DSCR. The lender is taking more risk without cash flow coverage, so they price accordingly. Still much lower than hard money.
Usually 65-75% LTV, sometimes up to 80%. Lower than standard DSCR (often 80%) because the lender wants more equity buffer given they're not measuring cash flow.
Yes, often higher — 680-700+. Since cash flow isn't part of the underwriting, credit profile and reserves become more critical. Expect to show 6-12 months of reserves.
We work with multiple lenders offering No Ratio programs. Competitive pricing, fast close.
Get No Ratio DSCR Quote →No credit pull. No commitment. Speak with a licensed financing firm that knows the Texas investor market.
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