DSCR loans: qualify on the rental, not your tax return
A debt service coverage ratio (DSCR) loan looks at whether the property's rent covers its mortgage payment. Your personal income and tax returns typically aren't used, which makes it a natural fit for business owners building a rental portfolio.
Is this you?
- You're buying or refinancing a rental property, not a home you'll live in
- Your tax returns don't reflect your income, or you'd rather keep them out of it
- You want to hold property in an LLC
- You're growing a portfolio and want each property to qualify on its own numbers
How qualifying works
The lender estimates the property's monthly rent using a lease or an appraiser's rent schedule.
It divides that rent by the property's monthly housing cost (principal, interest, taxes, insurance, and any HOA dues). The result is the DSCR.
A ratio of 1.0 means the rent covers the payment. Many lenders prefer 1.0 or higher, and some allow lower ratios with adjustments.
Because the property qualifies itself, your personal income usually isn't calculated at all.
Illustration only. Each lender sets its own DSCR minimums and calculation method.
Not sure this is the right program?We'll compare it against the others on your actual numbers.
Check my optionsWhat you'll typically need
- A purchase contract or current mortgage statement
- A lease, or the appraiser's market rent schedule
- Entity documents if you're closing in an LLC
- Asset statements for funds to close and reserves
- Photo ID and a credit report
Typical guidelines
Every lender sets its own rules. These are common patterns, not promises, and they change. We match your file to the lender whose guidelines fit it best.
- Occupancy: investment property only
- DSCR: many lenders look for 1.0 or higher; some allow lower
- Credit: many programs start around 620 to 660
- Reserves: several months of payments in the bank is common
- Rentals: long-term leases and many short-term rentals
Who it fits (and who it doesn't)
Usually a good fit
- Rentals where market rent covers the payment
- Investors buying in an LLC
- Owners scaling past conventional loan limits on number of properties
Maybe not the best fit
- A home you plan to live in (see bank statement loans)
- Properties where rent won't come close to the payment
DSCR Loans: common questions
What does DSCR mean?
DSCR stands for debt service coverage ratio. For a rental mortgage, it's the property's monthly rent divided by its monthly housing payment. A DSCR of 1.0 means the rent exactly covers the payment.
Do DSCR loans require tax returns?
Typically no. DSCR loans qualify the property, not you, so personal income and tax returns usually aren't used. Lenders still check credit, assets, and the property itself.
Can I get a DSCR loan in an LLC?
Many DSCR lenders allow you to take title in an LLC or other entity, usually with a personal guarantee. Requirements vary by lender.
Can I use a DSCR loan for a short-term rental?
Some lenders allow short-term rental income, often using a market analysis or the property's booking history. Guidelines vary, so we match the lender to the property.
DSCR Loans are non-QM programs, not available in all states, and subject to credit approval, income and asset verification, and appraisal. Guidelines shown are typical illustrations and vary by lender. This is not a commitment to lend. Matador Lending, NMLS #2072896. Equal Housing Opportunity.
Guides for this program
DSCR loans for business owners: qualify on the rental, not your tax return
DSCR loans qualify you on the rental's income, not your tax return. Here's how the ratio works and why business owners who invest in real estate use them.
What is a non-QM loan? A plain-English guide for self-employed borrowers
Non-QM loans let lenders verify income in ways that fit how business owners actually earn. Here's what the term means and how these mortgages work.
Getting a mortgage for LLC and S corp owners
Your business structure changes how a lender reads your income. Here is what LLC and S corp owners should know before applying for a home loan.
Find out what you qualify for in about 60 seconds
No tax returns. No credit pull to start. Just a straight answer from a broker who works for you.
Equal Housing Opportunity · NMLS #2072896 · Powered by Matador Lending