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eHub Financial

1-800-757-1826

  • About
  • Mortgages
    • New Mortgage
    • Second Mortgage
    • FHA Loans
  • Refinance
  • VA Loans
  • Bank Statement Loans
  • DSCR Loans
  • Log In

DSCR Loans

Income-Based Investment Loans

If you're a real estate investor, you’ve likely heard of DSCR loans, also known as Debt Service Coverage Ratio loans, or rental property mortgages. These loans are a great option for investors looking to finance properties without relying on personal income verification. In this guide, we’ll explain what a DSCR loan is, who qualifies, and what you need to secure an investment property loan.

What is a DSCR Loan?

A DSCR loan (Debt Service Coverage Ratio loan) is a type of mortgage specifically designed for real estate investors.


Unlike traditional loans that focus on your personal income, investment property loans looks at the rental income generated by the property you're purchasing or refinancing. Lenders use the Debt Service Coverage Ratio to assess whether the property’s income is enough to cover the mortgage payments.


In simpler terms, the lender asks: “Can the investment property pay for itself?” If the rental income is sufficient, you're on the right track to qualify for a rental property mortgage.

How to Calculate DSCR

Calculating DSCR is straightforward and an important part of understanding if your property can qualify for a DSCR loan.  

 

  • Net Operating Income (NOI) = The income the property generates after deducting operating expenses (such as maintenance, property taxes, and management fees).


  • Total Debt Service (TDS) = The total amount of mortgage payments (including principal and interest) on the property.

For example, if a property generates $120,000 in NOI annually and the total debt service (mortgage payment) is $100,000, DSCR would be 1.2.


This means the property generates 20% more income than is needed to cover its mortgage payments, which is usually favorable to lenders.

How to Qualify for a DSCR Loan

DSCR loans are designed for individuals looking to invest in rental properties. Whether you're a seasoned real estate investor or just getting started, you can qualify if:


  • You're purchasing or refinancing an investment property (single-family home, multifamily building, or commercial real estate) and need an investment property loan.


  • You can demonstrate that the property’s income is enough to cover the mortgage.


  • You want a loan that doesn't require tax returns or traditional income documentation.


This makes DSCR loans perfect for investors who want a no-income verification loan, allowing them to focus on the property’s performance rather than their personal finances.

How to Get an Investment Property Loan

Property Cash Flow

Property Cash Flow

Property Cash Flow

The most critical factor is the Debt Service Coverage Ratio (DSCR). A DSCR of 1.0 means the property can exactly cover its mortgage, but lenders typically prefer a DSCR of 1.2 or higher to ensure there's a buffer.

Down Payment

Property Cash Flow

Property Cash Flow

Expect to provide a down payment of around 20-30% when applying for a rental property mortgage. The exact amount may vary based on the loan size and the property’s potential income.

Credit Score

Property Cash Flow

Credit Score

While personal income isn’t the focus, lenders still check your credit score. A minimum score of 620 is often required, though a higher score could lead to better terms.

Loan Amount

Property Appraisal

Credit Score

DSCR loans work particularly well for larger properties with significant rental income. If you’re seeking a high loan amount for an investment property, this type of loan is ideal.

Property Appraisal

Property Appraisal

Property Appraisal

Lenders will require an appraisal to confirm the property’s market value and potential rental income.

Location

Property Appraisal

Property Appraisal

eHub Financial offers real estate investors DSCR loans in 35 U.S. States. Call us today to see if loans are available in the State your investment property is in. 

Think a DSCR Loan is Right for You?

Click below to get started on your DSCR loan application!

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Ready to Explore DSCR Loans?

If you're an investor looking to avoid the complexities of traditional loans, such as providing tax returns and W-2s, a DSCR loan, also known as an investment property loan, is an excellent alternative. By focusing on the property’s income rather than your personal income, the process is streamlined and ideal for those managing multiple investment properties or expanding their real estate portfolio. 


If you're looking for an easy, flexible way to finance your rental property, a DSCR loan might be the right solution for you. With DSCR loan requirements focusing on rental income rather than personal finances, it's a smart option for growing your real estate investment portfolio. 


Contact us today to learn more about how you can qualify for a cash flow mortgage or explore other no-income verification loan options for real estate investors.

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