DSCR Loans Explained: Investment Property Financing Without Tax Returns
Conventional investment property mortgages cap most investors at 4–10 loans based on DTI math. DSCR loans throw that math out — they qualify the property's rent vs PITI. If DSCR ≥ 1.0, you qualify regardless of how many other doors you own.
How DSCR is calculated
DSCR = Monthly Rent / Monthly PITIA (principal, interest, tax, insurance, HOA). 1.0 means rent exactly covers debt service. Most lenders require 1.0–1.25 minimum; 1.0 deals price higher.
Typical terms
30-year fixed or 5/7/10 ARM. 75–80% LTV purchase, 70–75% cash-out refi. Rates run 1.5–2.5% above conventional. 1–3 points typical. Interest-only options available on 7/10 ARMs.
Documentation
No tax returns, no DTI, no employment verification. Lender wants: lease (or market rent appraisal for vacant), 2 months reserves, 660+ FICO usually. LLC ownership preferred for portfolio investors.
Short-term rental DSCR
Specialty product using projected STR revenue (AirDNA data) instead of long-term lease. Higher rates but unlocks Airbnb-only properties that wouldn't pencil on long-term rent.
When DSCR loses
Owner-occupied — use conventional. <1.0 DSCR with no value-add story — lender will decline or reprice. Pristine W-2 income with low DTI — conventional is cheaper if you qualify.
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