What Are the DSCR Loan Requirements? #

DSCR loans allow investors to qualify for financing based on a property’s cash flow rather than personal income. While requirements can vary by lender, there are common standards that most investors should expect when applying for a DSCR loan.

Core DSCR Loan Requirements #

• Minimum DSCR: Most lenders require a ratio between 1.0 and 1.25. This ensures the property generates enough income to cover debt payments.

• Down payment: Investors should expect to put down 20 to 25 percent of the purchase price.

• Credit score: Many programs require a minimum score of 660 or higher. A stronger score can help secure better terms.

• Property type: Eligible properties are typically income-producing rentals, such as single-family rentals, condos, or multifamily units.

• Documentation: Unlike traditional loans, DSCR programs do not require W-2s or tax returns. Instead, lenders focus on rent rolls, leases, or appraisals that demonstrate cash flow.

Additional Factors Lenders Consider #

Some lenders also look at the investor’s track record with managing rental properties. Reserves may be required to cover several months of payments in case of vacancies or unexpected expenses. Location and property type also play a role, as markets with stronger demand may be favored.

Who Benefits From DSCR Loans #

These loans are popular with self-employed borrowers, first-time investors, and those with non-traditional income sources. Investors focused on scaling rental portfolios also benefit since approvals are based on the property’s performance rather than personal financials.

Summary #

The most common DSCR loan requirements include a minimum DSCR of 1.0 to 1.25, a 20 to 25 percent down payment, a credit score of at least 660, and proof that the property can generate steady rental income. Meeting these requirements opens the door to financing that prioritizes cash flow over personal income.