What Is a DSCR Loan? Real Estate Investor's Complete Guide
If you're a real estate investor, you've probably run into this problem: the property generates strong rental income, but your personal tax returns don't reflect your true financial picture — because write-offs reduce your taxable income. DSCR loans solve this problem by qualifying you based on the property's rental income alone, not your personal income.
What Is DSCR?
DSCR stands for Debt Service Coverage Ratio. It's a measure of a property's ability to generate enough rental income to cover its mortgage payments. Lenders use DSCR to assess whether an investment property is self-sufficient — meaning the rent pays the note.
DSCR loans are a type of Non-QM (Non-Qualified Mortgage) product — designed specifically for real estate investors who don't fit traditional lending boxes.
How Is DSCR Calculated?
DSCR = Gross Monthly Rent ÷ PITIA
PITIA = Principal + Interest + Taxes + Insurance + HOA (if applicable)
Example Calculation
A DSCR of 1.33 means the property generates $1.33 for every $1.00 of debt service — well above most lender minimums.
DSCR Requirements: What Do Lenders Look For?
| DSCR | Interpretation | Lender Eligibility |
|---|---|---|
| 1.25+ | Excellent cash flow | Most lenders accept |
| 1.10–1.24 | Good cash flow | Many lenders accept |
| 1.00–1.09 | Break-even cash flow | ⚠️ Some lenders accept (higher rate) |
| 0.75–0.99 | Negative cash flow | ⚠️ Select lenders only (DSCR No-Ratio) |
| Below 0.75 | Significant shortfall | ❌ Most lenders decline |
Some lenders also offer DSCR No-Ratio loans — where no rental income verification is required. These typically have higher rates and require stronger credit and larger down payments.
Key Benefits of DSCR Loans
- No personal income verification: No W-2s, no pay stubs, no tax returns required. The property qualifies itself.
- Scale your portfolio faster: Traditional lenders often cap investors at 4–10 financed properties. DSCR lenders focus on the asset, not the borrower's debt load.
- Self-employed and business owner friendly: Write-offs reduce taxable income on paper, but DSCR lenders don't care about that — only the property's rent income.
- Close in an LLC: Many DSCR lenders allow title to be held in an LLC, maintaining legal separation between your personal and business assets.
- Cash-out refinance available: Pull equity from investment properties to fund your next acquisition — without your personal income being a bottleneck.
Who Is a DSCR Loan For?
DSCR loans are designed for real estate investors — not owner-occupants. The property must be non-owner occupied: a rental home, duplex, multifamily, short-term rental (Airbnb), or commercial-residential hybrid.
Typical borrowers include: landlords expanding their rental portfolio, house hackers looking to finance additional rentals, self-employed investors with strong assets but complex tax returns, and experienced investors who want to close quickly without submitting a mountain of income documentation.
Property Types That Qualify
- ▸ Single-family rentals (SFR)
- ▸ 2–4 unit multifamily
- ▸ Condos (warrantable)
- ▸ Townhomes
- ▸ Short-term rentals (STR / Airbnb)
- ▸ 5–8 unit multifamily (select lenders)
Typical DSCR Loan Terms
Loan Amounts
$75K – $3M+
Credit Score Min.
620+
Down Payment
20–25% (purchase)
Interest Rates
Typically 0.5–1.5% above conventional
Loan Terms
30-yr fixed, 5/6 ARM, 40-yr IO
Prepayment Penalty
Common (3–5 year step-down)
How to Apply at Tiger Loans
Tiger Loans specializes in Non-QM products including DSCR loans. Our process is straightforward:
- 1Talk to a Tiger Loans loan officer about your investment property and goals
- 2Provide a signed lease agreement or rental market analysis (for the subject property)
- 3Submit credit authorization and entity documents (if closing in LLC)
- 4Receive a loan estimate within 24 hours
- 5Close in as little as 21 days
Ready to Finance Your Investment Property?
Tiger Loans offers DSCR loans for real estate investors nationwide. No personal income docs required.
Talk to a Loan Officer*Rates, terms, and DSCR requirements vary by lender and property type. Contact Tiger Loans, Inc. NMLS #1169300 for program details and your personalized quote.