Quick answer
On a purchase, the rent used in the ratio usually comes from the appraiser’s market rent estimate, or from an existing lease if the property is already tenanted. You bring a down payment and post-closing reserves; the property’s projected rent qualifies the loan. We arrange and shop the financing from wholesale lenders on your behalf.
Often suits
- Investors buying single-family or 2-4 unit rentals
- Buyers acquiring tenant-occupied property with leases in place
- Purchasers vesting in a new or existing LLC
- Investors who want to keep personal income out of the file
What lenders evaluate
- Purchase contract and earnest money
- Appraised value and market rent estimate
- Existing leases, if the property is occupied by tenants
- Source of down payment and closing funds
- Reserves remaining after closing
- Guarantor credit and entity documents
Where the rent figure comes from
Without a lease, the lender relies on the appraiser’s comparable rent schedule, which estimates what the property should rent for based on nearby rentals. If tenants are already in place, the lender reviews the leases, and some programs use the lower of the lease rent and the market estimate. Knowing which rule applies matters when the ratio is close.
Timeline of a DSCR purchase
- Scenario review: price, expected rent, taxes, insurance, dues and your target down payment
- Program match: we compare wholesale lenders whose guidelines fit the property and borrower
- Application and disclosures once a property is under contract
- Appraisal with rent schedule, title work and insurance binder
- Underwriting and conditions, including entity documents if vesting in an LLC
- Closing, where the business-purpose and occupancy certifications are signed
Planning the down payment and reserves
Leverage on a purchase depends on the program, the ratio, credit and property type. Separately, most programs require liquid reserves after closing, expressed as a number of months of PITIA. Funds that go into the down payment cannot also count as reserves, so plan both together before you write an offer.
Questions about dscr purchase loans
Can I use a DSCR loan if the property has no tenant yet?
Often yes. Many programs use the appraiser’s market rent estimate for vacant purchases. Some apply additional requirements, so the specific lender’s guidelines govern.
Can I close in my LLC?
Many wholesale lenders allow vesting in an LLC with a personal guaranty from the members. Expect to provide formation documents, an operating agreement and an EIN letter.