DSCR Loans. Qualify on the Property's Cash Flow.
DSCR stands for debt service coverage ratio, whether a rental's income covers its housing expense. On qualifying programs, the property's cash flow is the main income test. No tax returns, no W-2s, no personal income verification. Credit, assets, reserves, and the property still apply.
*Available on qualifying programs; eligibility, leverage, and terms vary by program, property, and borrower profile.
Reviewed by Taylor Cabaniss, Founder & Mortgage Broker, NMLS #910852Updated
How DSCR Works
DSCR = monthly qualifying rental income รท monthly housing expense (principal, interest, taxes, insurance, and association dues). On the coast, flood insurance often belongs in that number too.
If qualifying rent is $3,000 and the housing expense is $2,400, the DSCR is 1.25. DSCR is a lender qualification measure, not a measure of profit, it doesn't include vacancy, maintenance, or management.
Ratio Tiers
| Ratio | What it means |
|---|---|
| 1.25 and above | Typically the strongest pricing and widest program options |
| 1.00 to 1.24 | The most common tier, with broad availability |
| Below 1.00 | Available on select programs, usually with a larger down payment or rate adjustment; asset depletion can strengthen the file on qualifying programs |
| No Ratio | Select programs don't require a minimum DSCR; eligibility leans more on loan-to-value, credit, reserves, and the property |
Run Your Numbers
The calculator includes a flood insurance field, which matters more in coastal South Carolina than most calculators account for.
Program Highlights
- Up to 85% LTV on purchases for qualified borrowers on qualifying programs
- No personal income verification or tax returns on qualifying programs
- Short-term rental income accepted on select programs
- Cash-out refinances available, subject to program guidelines
- Close in your personal name, an LLC, or another entity
- Single-family, 2 to 4 unit, condos, townhomes, and short-term rentals; 5+ units may shift to a commercial structure, ask us
Build-to-Rent / DSCR Takeout
Finished the build but no tenant yet? On qualifying programs, a DSCR loan can provide permanent financing once the property has its Certificate of Occupancy. An executed lease isn't required on qualifying transactions; market rent may be used to qualify.
Portfolio Financing
Own several stabilized rentals? Financing each one individually is often cleanest, but portfolio financing can make sense when properties share the same long-term strategy. We'll compare both. (A blanket loan is short-term bridge or construction financing; a portfolio loan is long-term financing for stabilized rentals.)
How This Can Work
An investor with three long-term rentals wants to add a short-term rental near the coast. His write-offs make his tax returns look thin, so we qualify him on the property's projected rental income and close in his LLC.
Frequently Asked Questions
On qualifying DSCR programs, no, no tax returns, W-2s, pay stubs, or employment verification. Credit, assets, and reserves are still reviewed.
There are still options. Sub-1.0 programs are available with pricing adjustments, asset depletion can strengthen the file on qualifying programs, and No Ratio programs may apply.
No. DSCR loans are for business-purpose investment properties. We have other programs for primary residences without traditional income documentation.
On select programs, yes, using market data or the property's actual booking history.
Lowcountry Home Loans is licensed in South Carolina. For property outside the state, our sister company Lowcountry Lending Group serves clients nationwide.
Let's TalkRun Your Numbers. Then Let's Talk.
Start with the calculator, then send us the deal. We'll come back with real options and an honest read.