Investor Program

DSCR Loans

Q: Can I use projected rent instead of actual rent?

Yes. If the property is vacant or being purchased, lenders typically use a market rent analysis from the appraisal (such as Fannie Mae Form 1007) to establish projected income.

Q: Is there a prepayment penalty?

Most DSCR loans include a prepayment penalty, commonly structured as 3-year or 5-year step-down penalties. Some lenders offer a no-prepay option at a slightly higher rate.

Q: Can I do a cash-out refinance with a DSCR loan?

Yes. Cash-out refinances are available on DSCR loans, typically requiring a maximum 70–75% LTV and 6–12 months of seasoning since acquisition.

Q: How does DSCR compare to bank statement loans?

DSCR loans are specifically for investment properties and qualify based on property income. Bank statement loans are for borrowers who want to use personal bank deposits as income — and can be used for primary, second home, or investment properties.

Qualify based on your property's rental income — not your personal tax returns or W-2s.

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Program Overview

A DSCR (Debt Service Coverage Ratio) loan is a type of non-QM mortgage designed for real estate investors. Instead of verifying personal income through tax returns, pay stubs, or W-2s, the lender evaluates whether the property's rental income covers the mortgage payment. Borrowers may qualify primarily based on the property's rental income, subject to lender guidelines, credit profile, reserves, appraisal, rent analysis, property eligibility, and state availability. DSCR loans are a common tool for investors scaling a rental portfolio because they use the property's cash flow rather than traditional personal income documentation.

Who Is This Loan For?

✓ Real estate investors building or scaling a rental portfolio
✓ Self-employed borrowers whose tax returns understate real earnings
✓ Investors who already own multiple financed properties
✓ Borrowers who want to qualify without personal income documentation
✓ LLC and entity-based investors (vesting in entity often allowed)

Key Benefits

No Personal Income Verification

DSCR programs generally do not require traditional personal income documentation, though lender documentation requirements vary.

Scalable

No conventional limit on number of financed properties. Ideal for portfolio growth.

Entity Vesting

Close in the name of an LLC, corporation, or trust — unlike conventional loans.

Streamlined Documentation

Reduced personal income documentation requirements can mean fewer bottlenecks in underwriting; actual timelines depend on lender, appraisal, and third-party turn times.

Qualification at a Glance

Credit620–680+ (varies by lender)

Down Payment20–25% minimum

OccupancyInvestment property only

Property TypesSingle-family, 2–4 units, Condos (warrantable), Townhomes, 5–8 units (select lenders)

General Requirements

DSCR of 1.0 or higher preferred (some lenders allow 0.75 with reserves)
Minimum credit score of 620–680 depending on lender
Minimum 20–25% down payment
Property must be non-owner-occupied (investment only)
Appraisal with rent schedule or comparable rent analysis required
Cash reserves typically required (3–12 months PITIA)

Advantages

✓ No personal income verification required
✓ No limit on number of financed properties
✓ Close in LLC or entity name
✓ Faster process than conventional investor loans
✓ Interest-only options available
✓ Cash-out refinance available
✓ No employment verification

Tradeoffs to Consider

↔ Higher interest rates than conventional investor loans (typically 1–2% higher)
↔ Requires 20–25% down payment
↔ Investment property only — cannot be used for primary residence
↔ Higher reserve requirements
↔ Prepayment penalties common (3–5 year terms)
↔ Not available through Fannie Mae / Freddie Mac

Common Scenarios

Investor with 10 Financed Properties

A real estate investor has maxed out conventional financing (limited to 10 properties). DSCR loans allow continued portfolio growth with no cap on financed properties.

Self-Employed Investor with Low Taxable Income

A business owner writes off significant expenses, showing $40K taxable income. Their rental property generates $3,000/month against a $2,200 PITIA — DSCR of 1.36. They qualify easily on cash flow alone.

LLC Purchase for Asset Protection

An experienced investor wants to hold properties in an LLC for liability protection. DSCR loans allow entity vesting, which conventional loans typically do not.

Documents Typically Needed

Rental lease agreement or market rent analysis
Property appraisal with rent schedule
Two months of bank statements (for reserves verification)
Entity documents (if closing in LLC)
Insurance quote
Government-issued ID

What DSCR ratio do I need?

Most lenders prefer a DSCR of 1.0 or higher, meaning the property's rental income covers 100% of the mortgage payment (PITIA). Some lenders offer programs for ratios as low as 0.75 with compensating factors like strong credit and large reserves.

Can I use projected rent instead of actual rent?

Is there a prepayment penalty?

Can I do a cash-out refinance with a DSCR loan?

How does DSCR compare to bank statement loans?

Broker Disclosure: Scout Financial Group Inc DBA Airus Lending is a licensed mortgage broker (NMLS #2187418) and does not make loans or credit decisions. Airus Lending works with multiple wholesale lenders to help borrowers compare available loan options. Final approval depends on the lender, automated underwriting findings, documentation, state requirements, and overall borrower profile. Not all applicants will qualify.