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What is a DSCR loan?

The short answer

A DSCR (debt service coverage ratio) loan is an investment property loan that focuses on whether the property's rental income can cover its payment, rather than relying only on your personal income. It's popular with real estate investors who are growing a portfolio or have complex tax returns.

How DSCR works

Lenders compare the property's expected rental income to its monthly housing costs. When the income covers the payment comfortably, the loan can be a strong fit.

Who it's for

  • Investors buying rental properties
  • Owners growing a portfolio
  • Self-employed investors with complex tax returns
  • Buyers who prefer to qualify on the property's income

What to expect

DSCR loans often require a larger down payment and cash reserves, and rates can differ from loans on a home you live in. Requirements vary by lender, which is why comparing matters.

The bottom line

If you're investing, the property itself can help you qualify. Let's see if the numbers work.

This is general information, not financial advice or a commitment to lend. All loans are subject to credit approval, and programs vary by lender and eligibility.

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