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What is a DSCR loan?
A rental loan that qualifies on the property’s cash flow.
By James Forte, NMLS 16443 · Updated October 13, 2026
Short answer: A DSCR (debt-service coverage ratio) loan is an investment-property mortgage that qualifies on the property’s rent compared with its payment, not on your tax returns or W-2.
The ratio
DSCR = monthly rent ÷ monthly PITIA (principal, interest, taxes, insurance, and HOA dues). Rent comes from a lease or the appraiser’s market-rent schedule. A $3,000 rent on a $2,500 payment is a 1.2 DSCR. Many programs look for about 1.0 or higher. Some go lower with more down payment or reserves.
What lenders still check
- Credit score and history
- Down payment and reserves
- The property: condition, type, legal units, and rent support
- Experience on some programs, especially for short-term rentals
Who uses DSCR loans
Investors growing a portfolio, self-employed buyers whose tax returns show heavy write-offs, buyers closing in an LLC, and owners doing a cash-out refinance on a rental. DSCR loans are for investment property only, not a home you live in.
Short-term rentals
Some programs allow Airbnb or VRBO income. The town has to allow the use. For example, New York City and Boston limit investor short-term rentals sharply. See New York and Massachusetts.
DSCR by state: Connecticut, New York, New Jersey, Massachusetts, Pennsylvania, Florida, South Carolina, North Carolina, Texas. Compare: DSCR vs. conventional · DSCR vs. bank-statement. Program: DSCR / investor.
General information, not a rate quote, a commitment to lend, or legal or tax advice. All loans are subject to credit, income, property, and underwriting approval.
Frequently asked questions
Do DSCR loans require tax returns?
Usually not for qualifying income. Credit, assets, and the property are still reviewed.
What is a good DSCR?
Many programs look for 1.0 or higher, meaning rent covers the full payment. A higher ratio usually means better terms. Requirements vary by program.
Can I live in a property financed with a DSCR loan?
No. DSCR loans are for non-owner-occupied investment property.
Can a DSCR loan close in an LLC?
Many programs allow an LLC borrower with a personal guarantee.
Fastest way to start
Talk to us about DSCR investor financing
Questions about your situation? Call or apply. Forte Financial funds loans in-house as a licensed lender in Connecticut, Florida, South Carolina, and Texas, and can still shop a loan if another investor fits better. In New York, New Jersey, Massachusetts, Pennsylvania, and North Carolina, we work as a licensed mortgage broker and shop your loan with our investor network. In New York, loans are arranged through third parties.
- Send the address and rent.
- Long-term or short-term?
- In-house in CT, FL, SC, TX; brokered elsewhere.
Licensed lender and broker. No rate, approval, or timeline guarantees.