The Ultimate Guide to DSCR Loans for Real Estate Investors

For real estate investors seeking scalable financing without the traditional income documentation hurdles, DSCR loans have emerged as a game-changing option. A Debt Service Coverage Ratio (DSCR) loan allows investors to qualify based on the income-generating potential of the property itself—not personal tax returns or W-2s. This guide covers everything real estate investors need to know to leverage DSCR loans effectively, including qualification criteria, benefits, and strategic use cases.

What Is a DSCR Loan?

A DSCR loan is a type of non-QM (non-qualified mortgage) financing designed for real estate investors. Instead of focusing on the borrower's personal income, lenders use the property's rental income to determine loan eligibility.

Formula:

DSCR = Gross Monthly Rent / PITIA (Principal, Interest, Taxes, Insurance, and Association Fees)

A DSCR of 1.0 means the property generates just enough income to cover its debt payments. Most lenders, including Launch Financial Group via rei.loans, require a minimum DSCR of 1.00, although lower ratios can be considered with compensating factors.

Key DSCR Loan Features for Investors

- Minimum Credit Score: 620

- Loan Purpose: Purchase, Refinance, Cash-Out

- Occupancy: Investment Properties Only

- Property Types: 1-4 Unit Residential, 5-10 Unit Multi-Family, 2-8 Unit Mixed-Use

- Loan Amounts: Up to $3M (larger available with secondary underwriting)

- Prepayment Penalty: Standard for business-purpose loans, with optional buyouts

- Documentation Required: Lease agreements and/or appraisals with rental surveys

Launch Financial Group does not require tax returns or employment verification for DSCR loan approvals.

Benefits of DSCR Loans

1. No Income Documentation Required

2. Scalability

3. Fast Closings

4. Flexibility on Property Types

5. Ideal for BRRRR Strategy

How to Qualify for a DSCR Loan

1. Property Income

2. Minimum DSCR (typically 1.00)

3. Credit Score (minimum 620)

4. Loan-to-Value (LTV) Ratios (up to 80%)

5. Reserves and Liquidity

6. Ownership Structure (LLC or personal name)

Common Use Cases for DSCR Loans

- Turnkey Rental Purchases

- BRRRR Strategy Refinance

- Portfolio Expansion

- Cash-Out Refinance

Challenges and Considerations

- Lower DSCR = Higher Rates

- Short-Term Rental Requirements

- Prepayment Penalties

- Location Restrictions: Not offered in ID, MN, ND, NV, OR, UT

How to Apply with rei.loans

1. Submit your property address and loan purpose

2. Upload your lease or rent roll

3. Get a soft credit pull and instant DSCR prequalification

4. Close in 14–21 days

Why Real Estate Investors Choose rei.loans

- Expertise in DSCR Financing

- Dedicated Investor-Focused Underwriting

- No Income, No Job, No Problem

- Entity-Friendly Structures

- Competitive Rates with No Hidden Fees

Ready to get started?

Visit rei.loans and submit your scenario for a same-day quote.

This article is for informational purposes only and does not constitute financial advice. All terms subject to change and borrower qualification.