Loan types
DSCR loan
An investment-property mortgage that qualifies on the property's rental cash flow — its debt-service coverage ratio — rather than the borrower's personal income or tax returns.
What does dscr loan mean?
DSCR stands for Debt-Service Coverage Ratio: the property's rental income divided by its mortgage payment.
A DSCR loan approves on that ratio rather than your W-2s, so self-employed investors and those scaling a portfolio can qualify without income-documentation hurdles.
- Ratio: lenders usually want 1.0–1.25 or better
- Down payment: typically 20–25%, plus cash reserves
- Rate: about a point above an owner-occupied loan
A Michigan example
Say a Detroit rental brings in $1,600 a month and the mortgage payment runs $1,280. Dividing rent by payment gives a DSCR of 1.25 — comfortably inside most lenders' target range.
At 20% down on a $200,000 duplex, that's a $160,000 loan qualified on the property, not your tax returns. A ratio below 1.0 means rent doesn't fully cover the payment, which most lenders decline.
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