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DSCR loans for real-estate investors
A DSCR (Debt Service Coverage Ratio) loan qualifies on whether the property’s rent covers the debt, not your personal income. It’s the common path for investors who can’t or don’t want to show W-2s, and most lenders want a DSCR of at least 1.2. Typical 2026 rates run 7.00% to 8.50%, above the ~6.80% on a conventional 30-year.
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Will your rental qualify
Enter price, rent, and rate. The DSCR verdict updates as you type. Hit 1.2 or higher and most lenders will work with you. Below that, you usually need more down or higher rent.
Assumptions: 25% down + 3% closing costs, 40% opex/vacancy load 30-year amortization. Lenders typically require DSCR ≥ 1.2. Estimates, not a quote.
Reality check. At ~7.75% financing and 25% down, hitting 1.2 is tough today. Across the metros our Index tracks, even the strongest cash-flow markets sit below 1.2 on these assumptions. To qualify, most buyers put more down, target higher-yield markets, or buy where rents are climbing.
How a DSCR loan works
1 · Qualify on the property
The lender underwrites the rent, not your income. They need an appraisal, a rent schedule, and a lease (or market-rent analysis).
2 · Compute DSCR
DSCR = net operating income ÷ annual debt service. Most lenders require at least 1.2, and a higher ratio (1.25 and up) usually brings better pricing.
3 · Close in weeks
No income docs means faster closes, often 2 to 4 weeks. Useful for self-employed investors, entities (LLCs), and competitive offers.
DSCR loan rates today
| Product | Typical rate | Best for |
|---|---|---|
| DSCR loan | 7.00% to 8.50% | Buy-and-hold rentals, self-employed investors |
| Hard money loan | 11.50%+ | Fast closes, distressed properties, short-term |
| Fix & flip loan | 12.50%+ | Purchase + rehab, repaid on resale |
| Conventional 30-yr (owner-occupied) | ~6.80% | Primary residences, full income qualification |
Illustrative market bands, not a quote or commitment. Actual rates depend on lender, borrower, DSCR, LTV, and property. Live feed.
DSCR loan pros and cons
Pros
- No personal income verification, which is ideal for self-employed and entity buyers
- Fast closings, often 2 to 4 weeks
- LLC and entity financing keeps the debt off your personal credit
- Can scale across many properties
Cons
- Higher rates than conventional (7.00% to 8.50% vs ~6.80%)
- 20 to 25% down required
- Needs the rent to cover the debt, so hitting 1.2 is hard in pricey, low-yield metros
- Prepayment penalties common in years 1 to 3
Frequently asked
What is a DSCR loan?
A DSCR loan is a no-income-verification investment mortgage. Approval is based on the property’s debt service coverage ratio, meaning whether rent covers the debt, rather than your W-2 income or tax returns.
What DSCR do I need to qualify?
Most lenders require a DSCR of at least 1.2, meaning net operating income must exceed annual debt service by 20%. Some lenders go to 1.0; stronger ratios get better pricing.
What are current DSCR loan rates?
DSCR rates typically run 7.00% to 8.50% in 2026 (vs ~6.80% for a conventional 30-year), reflecting the higher risk of no-income verification. Most lenders price them off a benchmark like the 5-year Treasury or SOFR plus a spread, so your DSCR, LTV, and credit move the rate.
How much down payment does a DSCR loan need?
Usually 20 to 25% down on a purchase. Lower DSCRs or riskier markets may require 25 to 30%.
Can I get a DSCR loan on my primary residence?
No. DSCR loans are for non-owner-occupied investment properties like rentals, and sometimes short-term rentals, depending on the lender.