DSCR loan questions, answered

A DSCR (debt service coverage ratio) loan is business-purpose financing for a non-owner-occupied rental property that qualifies primarily on the property’s rent compared with its full monthly payment, rather than on the borrower’s personal income.

Divide the property’s gross monthly rent by its monthly PITIA: principal, interest, property taxes, hazard insurance and any association dues. A result of 1.00 means the rent exactly covers the payment. Some lenders add items such as flood insurance or management to the expense side.

No. DSCRLoans.loan is a brand of Loan Daddy LLC, a licensed mortgage broker. We arrange and shop financing from wholesale lenders, who make the credit decision and fund the loan.

A broker gathers your scenario, compares programs from multiple wholesale lenders, submits the file to the lender that fits, and coordinates appraisal, title, insurance and closing. The broker is compensated as disclosed in your loan documents.

No. DSCR loans arranged through DSCRLoans.loan are for non-owner-occupied investment property only. Neither you nor a family member may live in it, and the loan may not be used for personal, family or household purposes.

Generally not. DSCR programs qualify on the property’s rent. Lenders still review credit, bank statements for reserves and closing funds, the appraisal and, if applicable, entity documents.

Yes. Wholesale lenders review the credit of the borrower or guarantor, and credit is one of the main factors in leverage and pricing.

Commonly single-family rentals, 2-4 unit residential, eligible condominiums and townhomes, and short-term rentals. Some programs extend to larger multifamily. Eligibility depends on the specific lender’s guidelines.

Many wholesale lenders allow vesting in an LLC or other entity, usually with a personal guaranty from the members. Talk to an attorney or CPA about whether an entity suits your situation.

Rates on DSCR loans move with the market and depend on the ratio, credit, leverage, property type, prepayment structure and lender. Any number we printed would be stale or misleading for your scenario, so we quote only after reviewing it.

Reserve requirements are set by each program, usually as a number of months of PITIA held in liquid accounts after closing. Larger loans and additional financed properties can raise the requirement.

Some wholesale lenders consider files where rent does not fully cover the payment, typically with lower leverage, stronger credit or more reserves. Options are narrower, so it is worth reviewing alternatives such as a larger down payment.

Timelines depend mainly on the appraisal, title, insurance and how quickly entity and asset documents are provided. Because personal income documentation is generally not required, the file can be simpler to assemble.

No. Submitting your scenario is a request to be contacted. It is not an application for credit and not a commitment to lend.