DSCR loans for investors
DSCR loans: finance a rental on its rent.
A DSCR (debt service coverage ratio) loan is a business-purpose mortgage on a rental property, qualified on the property’s own rent instead of your personal income. No tax returns or pay stubs; credit, assets and the appraisal are still checked. For business purposes only.
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Fidelity Residential · NMLS #103098 · Equal Housing Lender
- Direct, licensed lenderNMLS #103098. Check our licences on NMLS Consumer Access.
- The rent does the workNo tax returns or pay stubs for the income.
- One to ten unitsHouses, condos, small buildings and mixed use.
- A licensed loan officerA real person compares programs for your property.
The basics
How a DSCR loan works, and how DSCR is calculated
DSCR stands for debt service coverage ratio. The lender compares the property’s monthly rent with its full monthly payment: principal, interest, property taxes, insurance and any association dues. That comparison, the ratio, takes the place of your personal income.
No tax returns, pay stubs or debt-to-income ratio are used. Your credit, your record of housing payments, the money for the down payment and reserves, and the appraisal are still checked.
It is a business-purpose loan for landlords and investors buying or refinancing a property nobody on the loan will live in. You can hold title in your own name or in a company, such as a limited liability company, with the owners giving a personal guarantee.
How the ratio reads
- Above one: the rent covers the payment with room to spare
- At one: the rent just covers the payment
- Below one: the rent falls short of the payment; fewer programs fit
DSCR loans at a glance
- What it is: a business-purpose mortgage on a rental property, qualified on the property’s rent compared with its full monthly payment instead of on your personal income.
- How DSCR is calculated: the monthly qualifying rent divided by the monthly principal, interest, taxes, insurance and association dues. A ratio of one means the rent just covers the payment.
- Who it is for: landlords and investors buying or refinancing a property nobody on the loan will live in, in their own name or in a company.
- What you need: statements for the down payment, closing costs and reserves; the lease or booking history; the purchase contract when buying; company documents if a company holds title; photo identification. No tax returns or pay stubs.
- The calculator below: works out the ratio from the rent and the costs you enter, and shows the loan size the rent would support at common ratios. It is an estimate, not a decision.
Calculator
DSCR calculator
Enter the rent and the property’s monthly costs, including taxes, insurance and HOA dues, to see the debt service coverage ratio a lender would calculate. Use the interest rate from your own quote.
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Rent
Total for all units. Leave blank if the property is vacant.
The appraiser’s rent schedule. Lenders usually use the lower of the two.
The loan
From your own quote. This page does not state a rate.
Property costs
Leave blank if none.
Leave blank if none.
When every answer is in, see your result.
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Your result
| Principal and interest | – |
|---|---|
| Property taxes | – |
| Insurance | – |
| HOA dues | – |
| Total monthly payment (PITIA) | – |
| Largest loan at a ratio of 1.00 | – |
|---|---|
| Largest loan at a ratio of 1.25 | – |
| Largest loan at 1.00 where the lease counts only to 125% of market rent | – |
| Rent needed for a ratio of 1.00 | – |
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This calculator gives estimates for information only. It is not a loan application, an approval, a rate quote or a commitment to lend. The interest rate is the one you enter. Lenders set the qualifying rent from the lease and the appraisal; a lease above market rent counts only at programs that allow it, with proof of receipt, and some limit it to 120% or 125% of market rent. Each program has its own minimum ratio, loan-to-value, credit and reserve rules; most qualify an interest-only loan on the interest-only payment, and some do not. DSCR loans are for investment property only and are not available for a home you live in.
Properties
Rentals a DSCR loan can finance
Each program sets its own rules for the property. These are the main kinds we finance.
Houses, townhouses and condos
A single home let to a tenant on a lease, or one you are buying to rent out. The rent is taken from the lease and the appraiser’s rent schedule.
Two to four units
The rent of every unit counts toward the ratio. Nobody on the loan may live in any of the units.
Five to ten units and mixed use
Residential buildings of five to ten units, and small buildings with homes and a shop or office, based on the building’s rent. These are valued like small commercial property, so the appraisal and the reserves ask for more, and the programs want an experienced landlord.
Loans for five to ten units and mixed useShort-term rentals
A house, condo or two to four units let through a booking platform. Programs count this income differently from a lease: on a refinance they look at your booking history, and the most you can borrow against the value is usually lower. The property must be allowed to be let short-term where local rules require it.
Short-term rental loansBuy, refinance or take cash out
Buy a rental, refinance to change the loan, or take cash out of a rental you own. Fixed rates, interest-only periods and adjustable options exist in different programs.
How a cash-out refinance worksFrom a short-term loan to a rental loan
If you bought and renovated with a fix and flip loan and decide to keep the property, a DSCR loan can replace the short-term loan once the property is rented.
Fix and flip loans
Underwriting
DSCR loan requirements: what the lender still looks at
The rent replaces your income, not the rest of the file. The qualifying rent is generally the lower of the lease and the appraiser’s market rent; some programs count a higher lease when you can show it has been paid.
The ratio, your credit, the loan size, the property and whether it is a purchase or a refinance together set how much you can borrow against the value. A short-term rental, a vacant property or some condominiums can lower it.
Loan amounts run up to $4.5 million on one program, at a lower loan-to-value than smaller loans (figure checked 12 October 2026 against the programs we use; next review by 12 November 2026). Program limits change without notice and are not an offer.
Still checked
- Credit for each borrower or guarantor, and your recent mortgage or rent payments
- Assets for the down payment, closing costs and reserves
- The appraisal, with a rent schedule
- Landlord experience, where the program asks for it
How it works
The steps to a DSCR loan
Tell us about the property
The address, the units, whether it is rented or vacant, how you will hold title, and whether you are buying, refinancing or taking cash out. No income documents.
Credit and assets
We check credit for each borrower or guarantor, and you send statements for the down payment, closing costs and reserves.
Appraisal and the ratio
The appraiser values the property and reports market rent. We work out the ratio from the qualifying rent and the full monthly payment.
Sign and close
You sign a statement that the loan is for business purposes and that nobody on the loan will live in the property, and a personal guarantee if a company holds title. Then underwriting, title, insurance and closing.
A worked example, in words. Say you own two rentals in your own name and are buying a third, a single-family house that is empty today, to let on a lease.
- The rent. With no lease yet, the appraiser’s market rent from the rent schedule is used. Some programs lower how much you can borrow on a vacant property, so say at the start that it is empty.
- The payment. Add up principal and interest, property taxes, insurance and any association dues, all by the month.
- The ratio. Divide the rent by the payment. Above one, the rent covers the payment with room to spare; below one, it falls short and fewer programs fit.
- What moves it. A smaller loan lowers the principal and interest, so the ratio goes up. With an interest-only period, most programs qualify the loan on the interest-only payment, and some do not.
- The rest of the file. Credit for each borrower or guarantor and your recent mortgage or rent payments, statements for the down payment, closing costs and reserves, the appraisal, and a list of the rentals you own where the program asks about experience. No tax returns or pay stubs.
- Title and closing. Title in your own name or in a company such as a limited liability company, with the owners giving a personal guarantee. You sign a statement that the loan is for business purposes and that nobody on the loan will live in the property.
The DSCR calculator does this arithmetic with your own figures, and the rental deal analyzer tests the whole deal; both are estimates, not decisions. Would a loan on your own income suit better? See DSCR or conventional. A New Jersey rental? See DSCR loans in New Jersey.
Documents
What documents you need
No tax returns or pay stubs. Most investors can start with these.
- Bank or investment statements for the down payment, closing costs and reserves
- The current lease on a refinance, or the booking history for a short-term rental
- Your purchase contract, when you are buying
- Company documents if a company will hold title
- A list of the rentals you own, where the program asks about experience
- Photo identification for each borrower or guarantor
Before you sign a contract on a rental
Every cost below is part of the payment the rent has to cover, so check each one first.
- The current tax bill for the property itself, from the seller, the listing agent or the town
- An insurance quote, with flood insurance if the property needs it, because both are part of the payment
- Any association dues, and for a condominium, the association’s rules on renting; some condominiums can lower how much you can borrow
- The local rules on renting, and on short-term letting if you plan to let by the night or week
- Renovation plans: work that adds value can raise the assessment, and with it the tax bill, so ask the local tax assessor
New Jersey
DSCR loans for New Jersey rentals
Property taxes are part of the monthly payment the rent has to cover, together with principal, interest, insurance and any association dues. When you run the DSCR calculator for a New Jersey rental, enter the property’s own tax bill, because the taxes on the home you have in mind feed straight into the ratio.
Shore rentals let by the night or week are financed through our short-term rental loans, where local rules allow the property to be let short-term. Both are for business purposes only. We lend on New Jersey rentals from West Long Branch and our licensed Manalapan branch; see our Monmouth County page.
Questions
Common questions about DSCR loans
What are the DSCR loan requirements?
The property’s rent compared with its full monthly payment (the ratio), your credit and your recent housing payments, verified money for the down payment, closing costs and reserves, an appraisal with a rent schedule, a property nobody on the loan will live in, and, where the program asks, some landlord experience. See what the lender still looks at.
How is DSCR calculated?
Divide the monthly qualifying rent by the full monthly payment: principal, interest, property taxes, insurance and any association dues. The qualifying rent is generally the lower of the lease and the appraiser’s market rent. The DSCR calculator on this page does the arithmetic for you.
Can a DSCR be negative, or below one?
The ratio is the rent divided by the full monthly payment, so on a rental it does not fall below zero. When people call a DSCR negative, they usually mean it is below one. Below one means the rent does not cover the full monthly payment: the property has negative cash flow, and you pay the shortfall each month from other money. Some programs consider a property with a ratio below one; others need the rent to cover the payment in full, at one or above, so fewer programs fit. The ratio, together with your credit, the loan size and the property, also sets how much you can borrow against the value. The DSCR calculator shows where a rental stands.
Is a DSCR loan a no-income loan?
Your personal income is not documented and no debt-to-income ratio is used, so it is often described that way. It is not an undocumented loan: the rent, your credit, your assets and the appraisal are all verified. How far the rent must cover the payment differs by program, so ask a loan officer about the property you have in mind.
Can I live in a property I buy with a DSCR loan?
No. A DSCR loan is for investment property only. Nobody on the loan may live in the property, even part of the year, and you sign a statement saying so.
Do you need my tax returns?
No. The property’s rent takes the place of your income. Your credit, your assets and the appraisal are still checked.
Can a company hold title?
Yes. Title can be in your own name or in a company such as a limited liability company. The owners give a personal guarantee.
Can I put several rentals in one loan?
For experienced investors, some programs finance several rental homes in the same state under one loan, based on their combined rent. A property can be released from the loan when you sell it, on terms set in the loan. Portfolio rental loans
Is there a prepayment penalty?
Many DSCR loans have a prepayment penalty in the first years, where the law allows one, and options without one exist. Your loan officer explains the choices before you decide.
What DSCR do I need?
It differs by program. Some programs consider a property whose ratio is below one; others need the rent to cover the payment in full, at one or above, so fewer programs fit. The ratio, together with your credit, the loan size and the property, also sets how much you can borrow against the value. Ask a loan officer about the property you have in mind.
Do I need landlord experience?
Most programs want some, and you list the rentals you own where the program asks. Some programs accept first-time investors on tighter terms. Loans on buildings of five to ten units and mixed use are for experienced landlords.
Can I finance a rental that has no tenant yet?
A home you are buying to rent out can be financed on its rent, taken from the appraiser’s rent schedule. A vacant property can lower how much you can borrow against the value, so tell your loan officer at the start whether the property is rented or vacant.
Can I take cash out of a rental I already own?
Yes. A DSCR loan can buy a rental, refinance to change the loan, or take cash out of a rental you own. The rent, your credit, your assets and the appraisal are checked the same way, and on a cash-out the lender also asks how the cash will be used. See how a cash-out refinance works.
Should I use a DSCR loan or a conventional investment loan?
A conventional investment loan is underwritten on your own income, debts and credit; a DSCR loan on the property’s rent. If your tax returns show your income and your debts leave room, ask for a conventional quote too. If write-offs lower your returns, you already own several financed rentals or you want a company to hold title, a DSCR loan may fit better. Price both for the same property. DSCR or conventional, compared.
Can I get a 30-year DSCR loan?
Fixed rates, interest-only periods and adjustable options exist in different programs. The DSCR calculator on this page works out the payment for a 30-year fixed loan, a 40-year fixed loan, or either with the first 10 years interest-only, so you can see how each reads. Most programs qualify an interest-only loan on the interest-only payment, and some do not. Your loan officer tells you which terms the programs for your property offer.
Sources: Consumer Financial Protection Bureau, Regulation Z, 12 CFR 1026.3: exempt transactions, including credit for business purposes (opens in a new tab); Fannie Mae, Selling Guide B3-3.8-02, rental income from the subject property (opens in a new tab). Facts are stated in our own words.
Have a property in mind?
Get a quote, apply online, or talk the deal through with a licensed loan officer.
What happens next
- Tell us about your loan. A few quick questions about the property and the loan you want. No credit check to start and no obligation.
- A licensed loan officer reviews your answers and follows up with you, usually within one business day.
- This is a request for a quote, not a loan application and not a commitment to lend.
This page is general information, not a commitment to lend. Programs, terms and eligibility depend on credit, property, rent and underwriting review and are subject to change without notice. Business purpose investor loans are for investment property only.
Reviewed by Robert Shamie, CEO, NMLS #241428 · Last reviewed:
Fidelity Residential (PFN Lending Group, Inc., NMLS #103098) is a direct mortgage lender licensed in 40 states and the District of Columbia, with 26 years in business.