Everything you need to know before, during, and after hitting “submit”—from an actual lender who reviews these applications.
If you’ve ever applied for a conventional mortgage, you know the drill: two years of tax returns, W-2s, pay stubs, bank statements, a letter explaining that $47 deposit from your aunt, your firstborn child’s social security number, and possibly a blood sacrifice during the full moon. The difference between DSCR loans and traditional financing comes down to one beautiful word: simplicity.
DSCR loans are supposed to be easier. And they are—but “easier” doesn’t mean “effortless.” There’s still a process, and understanding it before you start will save you time, frustration, and that particular kind of anxiety that comes from waiting for an underwriter to decide your fate.
This is your complete guide to applying for a DSCR loan, from the moment you think “I should buy that property” to the moment you’re signing closing documents.
Phase 1: Before You Apply (Do This First)
The best time to prepare for a DSCR loan application is before you have a specific property under contract. The second best time is right now.
Know Your Numbers
Before you even talk to a lender, you should be able to answer these questions. Our DSCR Calculator can help you model different scenarios:
- What’s your credit score? (Check all three bureaus—lenders use the middle score)
- How much liquid cash do you have access to? (Not equity, not retirement funds—actual liquid reserves)
- How many investment properties do you currently own?
- What’s the current rent (or projected rent) on the property you’re targeting?
- What purchase price and loan amount are you considering?
If you don’t know your credit score, stop reading this article and go check. Seriously. We’ll wait.
Understand What DSCR Lenders Actually Care About
Traditional mortgage underwriting is obsessed with your income. DSCR underwriting is obsessed with the property’s income. But that doesn’t mean you’re invisible—lenders still evaluate several key factors.
The property’s DSCR: Does the rent cover the mortgage payment? By how much? At American Heritage Lending, our Invest Star program goes as low as 0.75x, while Invest Star Plus requires 1.1x minimum (for 720+ FICO). The ratio affects your rate and terms.
Your credit profile: Higher scores get better rates. Invest Star requires minimum 660 FICO; Invest Star Plus requires 700+. The best pricing kicks in at 740+.
Your liquidity: Lenders want to see reserves. At AHL, that means 3-6 months PITIA for standard deals (720+ FICO, ≤80% LTV), 9-12 months for higher-leverage or lower-DSCR scenarios.
Your experience: First-time investors are welcome on DSCR > 1.0x deals. Sub-1.0 DSCR requires that you’ve owned investment property for at least 12 months in the past 3 years.
The property itself: We lend on SFR 1-4 units, PUDs, condos, non-warrantable condos, and condotels. Property must be in C4 condition or better.
Get Pre-Qualified
Pre-qualification is a quick conversation where a lender reviews your basic scenario and tells you what you’d likely qualify for. It doesn’t require full documentation, and it gives you a realistic sense of your loan options before you’re in the heat of a deal.
At American Heritage Lending, pre-qualification takes about 15 minutes and involves:
- Quick credit check
- Discussion of your investment goals
- Review of the property type and rental market you’re targeting
- Preliminary rate and term estimates
- Overview of which program (Invest Star vs. Invest Star Plus) fits your scenario
Pre-approval comes later, once you have a specific property and we’ve verified your documentation. But pre-qualification is your starting point—and it’s free. Start your pre-qualification here.
Phase 2: You’ve Found a Property—Now What?
You’re under contract. The clock is ticking. Here’s how to move fast without making mistakes.
Step 1: Contact Your Lender Immediately
The moment you have a signed purchase agreement, reach out to your lender. Even if it’s 10 PM on a Friday. Even if you’re still celebrating. The sooner we know about your deal, the sooner we can start working on it. Contact our team or call (800) 745-9280.
When you call or email, have this information ready:
- Property address
- Purchase price
- Desired loan amount (usually 75-85% of purchase price, depending on FICO and DSCR)
- Current or projected monthly rent
- Target closing date
- Copy of the purchase agreement (if available)
Step 2: Submit Your Application
DSCR loan applications are simpler than conventional mortgages, but you’ll still need to provide documentation. Here’s what AHL requires—our full DSCR loan requirements page has complete details:
Personal Information:
- Government-issued ID
- Social Security number (for credit check)
- Current address and contact information
Entity Information (if applicable):
- LLC operating agreement or corporate documents
- EIN letter
- Certificate of good standing
Property Information:
- Purchase agreement
- Current lease(s) or rental listings/comparables
- Property insurance quote (rent loss coverage equal to 6 months qualifying rent required)
Financial Information:
- Bank statements
- Asset documentation showing reserves
- Schedule of real estate owned (list all properties to meet experience requirements)
Notice what’s NOT on this list: Tax returns. Pay stubs. Employment verification. That’s the beauty of DSCR.
Step 3: Lock Your Rate
Once your application is submitted and we’ve verified basic eligibility, you’ll have the option to lock your interest rate. Here’s something that sets AHL apart: we lock at application for 45 days, free. Many DSCR lenders don’t lock until clear-to-close or charge for locks and extensions. Our approach gives you certainty earlier in the process.
Should you lock immediately or float? There’s no universal right answer, but here’s our general guidance:
Lock if: Rates have been rising, you’re risk-averse, or you have a tight closing timeline.
Float if: Rates have been falling and you’re comfortable with some uncertainty.
When in doubt, lock. The stress of watching rates move against you isn’t worth the potential savings of a slightly better rate. Our DSCR Playbook has more detail on rate lock strategy.
Phase 3: Underwriting (The Waiting Game)
Your application is submitted. Your documents are uploaded. Now what happens behind the curtain?
What Underwriters Are Doing
Our underwriting team is reviewing your file for three things:
- Borrower qualification: Does your credit, liquidity, and experience meet program guidelines? For Invest Star, that’s 660+ FICO; for Invest Star Plus, 700+ FICO.
- Property qualification: Is this a property we can lend on? Does the rent support the loan amount at the required DSCR threshold?
- Documentation completeness: Do we have everything we need to make a final decision?
The Appraisal
We’ll order an appraisal to verify the property’s value and rental income. At AHL, we require an approved AMC and SSRs (Submission Summary Reports) unless the appraisal is transferred. The appraiser provides:
- Fair market value of the property
- Market rent estimate via Form 1007/1025 (for DSCR calculation)
- Property condition assessment (must be C4 or better)
- Comparable sales and rentals in the area
The appraisal typically takes 7-14 days depending on the market. A desk review is required on most loans. For loan amounts over $2 million, two appraisals are required.
Pro tip: If you have a current lease at market rent, provide it. Actual lease income often results in a more favorable DSCR calculation than appraiser estimates. And if the Form 1007 rent is within 20% of your actual lease, we might be able to use the higher figure.
Conditions and Stipulations
After initial review, you’ll likely receive a list of “conditions”; additional items the underwriter needs before final approval. Understanding common reasons DSCR loans get declined helps you anticipate what underwriters look for. Common conditions include:
- Updated bank statement (if your original statement is now more than 60 days old)
- Letter of explanation for credit inquiries
- Proof of insurance with required coverages
- HOA information (if applicable)
- Clarification on entity documentation
Respond to conditions quickly. Every day you delay is a day added to your closing timeline. And please, read the condition carefully before responding. “Provide updated bank statement” doesn’t mean “provide the same bank statement you already sent.”
Phase 4: Clear to Close
The three most beautiful words in mortgage lending: “Clear to Close.”
This means underwriting is complete, all conditions are satisfied, and we’re ready to prepare your final loan documents. Here’s what happens next:
Final Numbers Review
You’ll receive a Closing Disclosure (or similar document) before closing. Review it carefully:
- Is the loan amount correct?
- Is the interest rate what you locked?
- Are the closing costs in line with your estimate? (AHL fees: $1,449 underwriting + $150 desk review, plus applicable fees for Texas legal review, entity review, or processing)
- Is the cash-to-close amount accurate?
If something looks wrong, speak up immediately. It’s much easier to fix before closing than after.
Wire Your Funds
You’ll receive wire instructions from the title company. A few critical warnings:
- ALWAYS verify wire instructions by phone using a number you find independently, not one provided in an email
- Wire fraud is real and devastating. If someone emails you “updated” wire instructions, that’s a red flag
- Send your wire 24-48 hours before closing to ensure it arrives on time
Sign Everything
Closing day involves a lot of signatures. You’ll sign:
- The promissory note (your promise to repay the loan)
- The deed of trust or mortgage (the security instrument)
- Various disclosures and affidavits
- Title documents
Bring a valid government-issued ID. If you’re signing on behalf of an LLC, bring entity documentation as well.
Timeline Expectations
A typical DSCR loan timeline from application to closing:
Days 1-3: Application submitted, initial review, rate lock (AHL locks at application)
Days 3-7: Appraisal ordered through approved AMC
Days 7-21: Appraisal completed, underwriting review, conditions issued
Days 21-25: Conditions cleared, clear to close issued
Days 25-30: Closing documents prepared, final review, closing day
Total: 25-30 days for a smooth transaction. Complex deals or slow appraisals may take longer.
Can we close faster? Sometimes. Browse our case studies for examples. If you’re an experienced borrower with clean documentation, a straightforward property, and a cooperative seller, we’ve closed DSCR loans in as little as 14 days. But don’t count on it; build a 21 to 30-day timeline into your purchase agreement.
Common Mistakes That Slow Things Down
Learn from other people’s pain:
Incomplete applications: Missing documents = delays. Submit everything requested the first time.
Slow responses to conditions: When underwriting asks for something, respond within 24 hours if possible.
Major financial changes mid-process: Don’t open new credit cards, buy a car, or move large sums of money around while your loan is in process. We’ll notice, and we’ll ask questions.
Unrealistic timelines: If your purchase agreement has a 14-day closing and you haven’t even applied yet, we have a problem.
Insurance delays: Get your insurance quote early. You need rent loss coverage equal to 6 months qualifying rent and liability coverage of at least $100,000. Waiting until the last minute is a surprisingly common cause of closing delays.
Ready to Get Started?
Applying for a DSCR loan doesn’t have to be complicated. The process is simpler than conventional financing, the documentation is lighter, and the focus is on the investment – not your personal tax situation. If you’re new to investment lending, our guide for first-time investors covers what you need to know.
At American Heritage Lending, we’ve streamlined the DSCR application process to be as efficient as possible. Our team knows investment properties, understands what makes a deal work, and moves fast when you need us to. With 45-day rate locks at application and a clear underwriting process, you’ll know where you stand every step of the way.
Ready to apply? Start your pre-qualification today. You can reach us at (800) 745-9280 or apply online at ahlend.com.