DSCR Loan

A DSCR loan (Debt Service Coverage Ratio loan) is a mortgage that qualifies investor borrowers based on the cash flow of the investment property, rather than the borrower’s personal income from W-2 employment or self-employment.

How the DSCR ratio works

DSCR is calculated as monthly rental income divided by monthly debt service (principal + interest + taxes + insurance, sometimes with HOA). A DSCR of 1.0 means the rental income exactly covers the debt; 1.25 means the income is 25% higher than required debt; 0.85 means the property runs at a deficit. Most DSCR lenders require a ratio of 1.0 or higher; some accept 0.85+ at higher rates and lower LTV.

Why DSCR loans matter in 2026

DSCR is the fastest-growing non-QM product, with origination volume up 54% YoY in 2025 and an estimated $140B in 2026 origination volume. Investor borrowers prefer DSCR because it removes the income-documentation friction of conventional investment-property loans. Underwriters tolerate DSCR because the property cash flow is easier to verify than the borrower’s mixed-source personal income.

Typical DSCR loan parameters

• LTV ceiling: 75% for purchase, 70% for cash-out refi
• Credit score: 660+ minimum (most lenders), 700+ for best rates
• Property types: 1-4 unit residential investment, sometimes mixed-use
• Documentation: lease agreements, rent rolls (for portfolio borrowers), property management contracts, sometimes Schedule E
• Rate spread: typically 1.5-2.5% above conventional investment rates

Marketing DSCR to investor borrowers

Investor borrowers don’t search the way owner-occupant buyers do. Their pain points are different (qualification friction on personal income), the documentation is different, and the marketing motion is different. The CRM workflow needs investor-specific lead capture, conditional document logic, and portfolio-aware retention sequences.