DSCR Loans for Rental Property Investors: How to Qualify Without W-2 Income
If you're a real estate investor who doesn't show much income on paper—or prefers not to mess with tax returns when applying for a mortgage—then a DSCR loan (Debt Service Coverage Ratio loan) might be your new best friend. In this blog, we'll break down exactly what DSCR loans are, how they work, who qualifies, and how you can use one to scale your rental portfolio.
What Is a DSCR Loan?
DSCR stands for Debt Service Coverage Ratio—a fancy term that basically measures whether a property's income covers its mortgage payment. Lenders use this to determine if the property can "stand on its own" financially.
The DSCR Formula:
DSCR = Gross Monthly Rent ÷ Monthly Mortgage PaymentMost lenders want to see a DSCR of 1.00 or higher (meaning the rent fully covers the mortgage). Some go as low as 0.75, especially if you have strong reserves or equity.
Why DSCR Loans Are Great for Investors
Key Benefits:
- ✓ No personal income or tax returns required
- ✓ Qualify based on property cash flow only
- ✓ Works for LLCs and self-employed borrowers
- ✓ Quick closings and flexible underwriting
Ideal for:
- House hackers
- Airbnb investors
- Flippers holding long-term rentals
- Self-employed borrowers with write-offs
Example Calculation:
Rental Income: $2,500/month
Monthly Mortgage (PITI): $2,000/month
$2,500 ÷ $2,000 = 1.25 DSCR
That's a green light. Many lenders would approve this deal based on cash flow alone.
Minimum Requirements (Typical)
- DSCR: 0.75 to 1.00+
- Credit score: 620–700+ (varies by lender)
- Property types: 1-4 units, condos, some allow short-term rentals
- Loan amounts: $100K–$3M+
- Reserves: 3–6 months of PITIA
How to Get Started
- Pull rental comps or leases to estimate your market rent
- Connect with a broker (like us) who has access to multiple DSCR lenders
- Run the DSCR calculation
- Submit a streamlined application—no tax returns needed
Final Thoughts
DSCR loans are a game-changer for real estate investors looking to scale without jumping through traditional lending hoops. If you've got solid cash-flowing properties—or plan to buy one—this type of financing can help you grow fast.