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DSCR Loans

A Debt Service Coverage Ratio (DSCR) loan is a type of non-qualified mortgage (non-QM) primarily used by real estate investors to finance investment properties, such as rental properties. Unlike traditional mortgage loans that focus on the borrower’s personal income, credit score, or employment history, a DSCR loan evaluates the property’s ability to generate income to cover the mortgage payments. The lender assesses the property’s cash flow through its Debt Service Coverage Ratio, which compares the property’s net operating income (NOI) to its debt obligations.

It’s ideal for investors who want to qualify using the property's cash flow instead of tax returns or pay stubs.

What is DSCR?

DSCR = Net Operating Income (NOI) ÷ Debt Payments

  • Net Operating Income = Rental income minus property expenses (excluding loan payments)
  • Debt Payments = Principal + Interest (monthly mortgage payments)

Why DSCR Loans Are Popular?

  • No personal income docs needed. No W-2s, pay stubs, or tax returns required
  • Great for self-employed investors- Especially helpful if taxable income is low
  • Based on property cash flow- Qualification is based on rental income
  • Fast and flexible underwriting- Less red tape compared to traditional mortgages

Typical Loan Requirements

  • DSCR Ratio: Usually ≥ 1.0 (some allow 0.75–0.99 for higher rates/down payment)
  • Property Type: Single-family, condos, townhomes, or 2–8-unit properties
  • Credit Score: Often 660+, but varies
  • Down Payment: Typically, 20–25% Loan Term: Usually 30 years, interest-only options available.
  • Ownership: Must be non-owner-occupied, usually under LLC or investment name

DSCR Loan = Smart for:

  • Full-time real estate investors
  • House hackers
  • Self-employed buyers
  • Those who own multiple properties and want streamlined qualification

Whether you're purchasing your first rental property or expanding an established real estate portfolio, a DSCR loan can provide the flexibility you need to grow your investments without relying on personal income documentation. At Riviera Mortgage Group, we help real estate investors navigate their financing options and find loan solutions tailored to their investment goals. Contact our experienced team today to learn if a DSCR loan is the right fit for your next investment property.