The ratio, in plain terms
The lender divides the property's eligible monthly rent by its monthly payment, including taxes, insurance and any association dues. The higher the number, the stronger the file.
Back to self employed loan optionsLET THE PROPERTY
Ed Parcaut · Mortgage strategist in Modesto, California · NMLS #235384
LET THE PROPERTY
QUALIFY THE PROPERTY.
A DSCR loan, short for debt service coverage ratio, finances an investment property based on the rent it brings in compared with its monthly housing cost, rather than on your personal income. It is used by real estate investors and self employed borrowers buying or refinancing rentals. These are non qualified mortgage programs from individual lenders, and they are for investment property only, not a home you live in.
Who it fits
FOR INVESTORS
WHOSE INCOME IS COMPLICATED.
If your tax returns are full of depreciation and write offs, or you already own several properties, a DSCR review can keep your personal income out of the calculation. It is one option among several, and it is worth comparing against a conventional investment loan first.
Rent from a lease or an appraisal
Existing leases, or a market rent estimate from the appraiser, are commonly used to set the rent figure.
Investment property only
DSCR programs are for rentals. A primary home or a second home you use yourself needs a different loan.
Purchases and refinances
Many lenders offer DSCR for buying a rental and for refinancing one, including cash out, subject to their guidelines.
Program availability and requirements vary by lender and by your individual file. Nothing here is a commitment to lend.
What to gather
BRING THESE
TO THE TABLE.
You do not need everything before we talk. This is what a DSCR file usually asks for.
- Property details. Address or target area, property type and expected price or current value.
- Leases or rent information. Current leases for an occupied property, or what similar homes rent for nearby.
- Asset statements. For down payment, closing costs and reserves.
- Entity documents if you buy in an LLC. Many DSCR lenders allow closing in a business entity. Bring the formation and operating documents.
What is a DSCR loan?+
A mortgage for an investment property that qualifies you based on the property's rental income compared with its monthly housing cost, instead of your personal income.
What does DSCR stand for?+
Debt service coverage ratio. It is the property's eligible rent divided by its monthly payment including taxes, insurance and association dues.
Can I use a DSCR loan for my own home?+
No. DSCR programs are for investment properties. A primary residence or second home needs a different loan type.
Do I need tax returns for a DSCR loan?+
Generally not to calculate income, because the property's rent carries the qualification. Lenders still review credit, assets and the property itself.
Can I close a DSCR loan in an LLC?+
Many lenders allow it. Requirements for the entity documents vary by lender.
Related reading
KEEP LOOKING.
Bank statement loans
Document self employed income from deposits instead of tax returns.
See how it worksSelf employed borrowers
All the ways business income is reviewed, in one place.
Read the guideBuying another home
How a second purchase is weighed when you already hold a mortgage.
Read the guideReviews on Google
WHAT CLIENTS SAY
ABOUT WORKING WITH ED.
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Working with Ed Parcaut on our vacation home purchase was an outstanding experience from start to finish. Ed's expertise and deep knowledge of the lending process made everything feel seamless. He took the time to explain every step clearly, answered all of our questions with patience, and helped us navigate the unique aspects of financing a second home with confidence. What truly stood out was Ed's responsiveness and efficiency. No matter the time or situation, we always received quick updates and fast answers, which made the entire process move smoothly and on schedule. His professionalism, attention to detail, and commitment to excellent service exceeded our expectations. I highly recommend Ed to anyone looking for a knowledgeable, reliable, and highly responsive lender — for any home purchase.
Ed made the process so easy and simple for my wife and I. When we had questions, he had answers. He communicated with us constantly and clearly. I absolutely recommend his services. Owning our forever home post-military retirement and finally settling down and raising our family has been our goal for a long time and Ed helped make that a reality for us. Thanks again Ed!
I am thoroughly blessed, thankful and satisfied with the process. And all the time that it took the different steps it took to get this process done. Thank you, well done.
Ed is a true professional and I would recommend him to friends and family without hesitation. He kept us informed every step of the way all the way to closing! He's also just a really nice human being. No need to look anywhere else for your home loan needs cause Ed knows his stuff.
From beginning, middle, and end of this home lending experience my work with Ed, and Amy has been wonderful. They have been very supportive, and generous with their kindness, and they have excellent professionalism with regard to working well with all parties involved. Their knowledge, experience, and time has been much appreciated. Thank you so much, and I look forward to the next time we meet!
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