A DSCR loan — short for Debt Service Coverage Ratio loan — is a type of real estate investment mortgage that qualifies borrowers based on the rental income produced by the property rather than the borrower's personal income or tax returns. It is one of the most popular financing tools for residential real estate investors who own multiple properties, are self-employed, or whose tax returns don't reflect their true income.
DSCR is calculated by dividing a property's gross rental income by its total annual debt obligations (principal, interest, taxes, insurance, and HOA if applicable). A DSCR of 1.0 means the property generates exactly enough income to cover the mortgage. A ratio above 1.25 is considered strong — it means the property earns 25% more than required to service the debt. Most lenders require a minimum DSCR between 1.0 and 1.25 to qualify. At Riverside Park Capital, we underwrite each loan request individually, so properties with slightly lower DSCR ratios may still qualify depending on borrower experience and market conditions.
DSCR loans are ideal for: (1) Buy-and-hold rental investors who use depreciation and deductions that reduce reported taxable income; (2) Self-employed borrowers who don't show W-2 income; (3) Portfolio landlords looking to finance multiple properties without hitting conventional loan limits; (4) Short-term rental investors using platforms like Airbnb where gross rental income supports the loan even if occupancy is seasonal. Because DSCR loans focus entirely on property performance, lenders don't collect tax returns, W-2s, or personal pay stubs — making the approval process faster and simpler.
Conventional loans issued by Fannie Mae or Freddie Mac cap borrowers at 10 financed properties and require full personal income documentation. DSCR loans have no such cap. Investors can finance their 11th, 20th, or 50th property using DSCR underwriting. The trade-off is typically a slightly higher interest rate — usually 50 to 100 basis points above 30-year conventional rates — but the flexibility and speed of closing often outweigh the cost difference for active investors.
DSCR loans are typically 30-year fixed-rate mortgages, though interest-only options and ARM products are available. Loan-to-value ratios typically range from 70% to 80% on single-family rentals and 65% to 75% on 2-4 unit properties. Minimum loan amounts start around $100,000 and can go up to $5 million per property. Most programs require a credit score of 680 or higher, though some programs allow scores as low as 620 with a lower LTV.
Related Loan Program
Learn more about how Riverside Park Capital structures this loan type, rates, terms, and eligibility.
View Program