DSCR PROGRAM OVERVIEW

Program Name: Debt Service Coverage Ratio (DSCR) Loan Program
Purpose: Designed for real estate investors who qualify based on property cash flow rather than personal income.

Program Description

The DSCR Mortgage Program allows investors to use a property’s rental income to qualify for financing instead of traditional income verification such as pay stubs or tax returns.
The Debt Service Coverage Ratio (DSCR) determines whether the property’s rental income sufficiently covers the total housing expense (Principal, Interest, Taxes, Insurance, and HOA).

Formula:
DSCR = Gross Monthly Rent ÷ Total Monthly Housing Expense (PITI + HOA)

Key Highlights

  • Qualification: Based on rental income, not borrower income
  • No DTI calculation or tax returns required
  • Maximum LTV: Up to 80%
  • Minimum DSCR: 0.75 (lower ratios may be considered case-by-case)
  • Property Types: 1–4 unit residential, condos, and townhomes
  • Occupancy: Investment only (non-owner occupied)
  • Ownership: Individual or LLC
  • Loan Amounts: Up to $3,000,000
  • Term Options: 30-year fixed, 5/6, 7/6, 10/6 ARM, and Interest-Only
  • Prepayment Penalty: Typically 3–5 years (declining options available)
  • Cash-Out Available: Up to 75% LTV depending on credit and DSCR
  • Credit Score Minimum: 660 (varies by lender)

Sample DSCR / LTV / FICO Matrix

DSCR Range

Max LTV

Minimum FICO

Notes

≥ 1.25

80%

700+

Full cash flow coverage

1.00 – 1.24

80%

680+

Neutral coverage

0.75 – 0.99

75%

700+

Reduced cash flow; higher reserves required

< 0.75

70% (case-by-case)

720+

Considered exception with compensating factors

Reserve & Documentation Requirements

  • Reserves: Typically 6–12 months PITI (depending on DSCR and LTV)
  • Assets: Personal or business funds allowed with sourcing
  • Lease Documentation: Fully executed lease or market rent survey (1007)
  • Appraisal: Standard residential appraisal with comparable rents

Ideal Borrower Profile

  • Experienced or first-time investors seeking simplified qualification
  • Borrowers with multiple investment properties or complex tax situations
  • Self-employed investors with strong cash-flowing assets