Are you a real estate investor looking for a straightforward way to finance your next property? Non-QM DSCR loans might be the perfect solution. Unlike traditional loans, these products focus on the income-generating potential of your property rather than your personal income or tax returns. In this guide, I’ll walk you through everything you need to know about DSCR loans, how to calculate them, and how to qualify quickly with the best DSCR lenders in 2024.
What is a Non-QM DSCR Mortgage Loan?
Non-QM DSCR loans, short for Debt Service Coverage Ratio loans, are specifically designed for real estate investors. These loans fall under the category of non-qualified mortgages (Non-QM), meaning they offer flexible underwriting guidelines that cater to individuals who may not meet traditional lending standards. Instead of focusing on personal income lenders evaluate the property's ability to generate enough cash flow to cover debt payments.
Quick Overview
- Up to 80% for all investment properties 1-4 units. Air BNB & VRBO - OK
- DSCR 1.0+, DSCR below 1 and No Ratio DSCR available
- First time investors or Homeowners - OK
- LLC or personal name on title & closing documents - OK
How Does a DSCR Loan Work?
A DSCR mortgage for a 1-4 unit proprty calculates the ratio between a property’s gross rental income (GRI) and its debt obligations. Here’s how the math works:
DSCR Formula: Gross Rental Income ÷ Total Debt Service
Example: your rental property generates $8,000 monthly income and your monthly debt payment(mortgage) is $5,500.
Your DSCR is 1.45 ($8,000 ÷ $5,500 = 1.45).
Most non-QM lenders require a DSCR of at least 1.0 to qualify although we offer no ratio and DSCR loans form 0.75 to 0.99 .
Want to calculate your own DSCR? Use our DSCR Loan Calculator to get started.
DSCR Loan Minimum Requirements
While DSCR loans require no personal income or employment there's still basic qualification criteria you'll need to meet:
- Credit Score: Minimum 640 credit scores are required. Higher scores are best.
- Down Payment: Typically 20-25% of the property value.
- Experience: Owning or managing rental properties can strengthen your application.
- DSCR: A ratio of at least 1.00 is usually needed to qualify. Although, 0.75 is allowed as well
- Property Type: Detached homes, condos, townhomes, duplex, triplex, fourplex and 5-30 units.
- Liquid reserves Adequate savings to cover a 3-6 months of the mortgage payment.
Interest Rates and Loan Terms
DSCR loan rates tend to be .75 to 1.50% higher than conforming loans.
Interest rates are influenced by:
– your credit score
– loan-to-value ratio (LTV)
– DSCR > 1.20, DSCR 1.00 to 1.20, and 0.75 to 1
– current market conditions
Loan terms are typically 30 years with a fixed rate.
Interest-only payment option available for investors focusing on maximizing cash flow.
How to Qualify for a DSCR Loan Fast
Speeding up the approval process often comes down to preparation. Here are my tips:
- Have copies of the rental agreements or reliable market rent projections.
- Work with an experienced DSCR lender who understand real estate investors' needs.
- If available, provide an appraisal report and comparable sales.
- Submit your application and await lender approval.
Top DSCR Lenders for 2025
Choosing the right lender can make all the difference. Some of the best DSCR lenders in 2025 include those with specialized Non-QM loan programs made only for investors. Look for lenders that:
- – Offer competitive rates and terms.
- – Have expertise in Non-QM loan products.
- – Provide streamlined application processes for fast approvals.
Need a recommendation? Contact me to discuss which of lenders is the best fit for your goals.
Why Choose Our DSCR Loan Program?
Transform your real estate investment strategy with our DSCR financing programs. We offer unmatched advantages designed to accelerate your investment success.
Our Financing Benefits
- Wholesale Rate Advantage: Access industry-leading rates 0.25-0.5% lower than traditional lenders to maximize your investment returns
- Fast Closings: Streamlined process with 14-21 day closings helping you secure properties faster than competiting buyers
- Reduced Fees: 25-50% lower origination fees compared to other mortgage companies
- DSCR Expertise: Specialized loan product knowledge and successful solutions to overcome potential challenges
A Few Success Stories
Case 1: A Tampa investor purchased a duplex using a DSCR loan by using its rental income to meet the lender’s requirements. With a 1.35 DSCR ratio, they secured a loan quickly and began earning $2,500 monthly in rental income.
Case 2: A Miami property owner expanded their portfolio with a short-term rental funded by a DSCR loan. The property’s projected income far exceeded the monthly loan payments enabling a smooth approval process.