DSCR Loans
Also known as debt service coverage ratio loans and rental property loans. The best rental property loan for real estate investors and landlord. Easy to qualify for and no income or tax returns needed. Also known as debt service coverage ratio loans.
What are DSCR Loans
DSCR loans (Debt Service Coverage Ratio) the best loan option available for real estate investors with rental properties.
With DSCR loans also know as rental property Loans, you qualify based on the property’s income by calculating the debt service coverage ratio. To calculate this, take the gross rents of a property and divide it by your mortgage payment
Typically as a real estate investor you take all of the tax deductions you can on your tax returns which lowers your gross monthly income and it disqualifies you from conventional mortgages. With DSCR loans, there is no income needed, no employment to verify, and no tax returns required to qualify. Which makes them one of the easiest loans to get.
With DSCR loans you can now qualify for long term financing on your rental properties, tax as many tax write offs as you can on your tax returns (lowering your tax burden to the government) all while getting a loan on your rental.
What Do You Need To Qualify for a DSCR Loan
- Minimum 620 Credit Score
- Down payments as low as 15% (SFR), 20% (2 to 4 units), and 25% (5 to 30 units)
- Property Usage: Investment
- Eligibie Property Types: SFR, condo, townhomes, and multi-family (2 to 30 units)
- Can close in your business entity
- Must have 6 months of mortgage payment reserves on the subject property
- First time investors are eligible
Who Are DSCR Loans for?
DSCR Loans are the ideal loan type for real estate investors who can no longer qualify for a conventional mortgage, write off too much on their tax returns which equates to you not making the amount you need to qualify for a conventional loan, or anyone looking to purchase a rental property.
If you are looking for a rental property that loan, that has less conditions, and easier underwriting, then a DSCR loan is for you.
The DSCR Loan Process
Applying for a DSCR loan with us is simple. Either complete our DSCR Loan Qualifier online or schedule a fast consultation with me..
We then have you send us bank statements, business entity docs and fill out a loan application Then we go over what you can qualify for based on estimated numbers until you find your next rental that you want to finance.
To begin the pre-approval process, you will need to submit your bank statements, business entity docs, and ID.
Not Sure If A DSCR Loan Is Right For You?
Looking to finance a rental property? Whether you’re a first-time investor or expanding your portfolio, the right loan can make all the difference.
We specialize in helping borrowers secure competitive financing with flexible terms to maximize their investment potential. Let’s get you pre-qualified today!
Get approved Quick & Easy!
Loans we offer
Your Home Loan Could Be Fully Funded 21 Days From Now Without Any Hassles!
Conventional Loans
A popular mortgage option for borrower’s with strong credit and stable income. Down payments as low as 3% and with competitive and adjustable rate options.
Read moreFHA Loans
A great mortgage option for first-time home buyers or those with limited funds. They have flexible credit requirements and offer down payments as low as 3.5%.
Read moreVA Loans
The best loan option for eligible military veterans and active duty service members. 100% financing and no mortgage insurance.
Read moreJumbo Loans
A great mortgage option for borrower’s looking to finance a home that exceeds conventional loan limits. Down payments as low as 10%.
Read moreUSDA Loans
A perfect mortgage options for borrower’s looking to purchase a home in a rural area. There is no down payment required and have cheaper mortgage insurance.
Read moreFix & Flip Loans
The perfect loan option for real estate investors who are looking to finance a property that needs renovation. Finance 100% of the renovation with down payments as low as 10% of the purchase price.
Read moreDSCR Loans FAQ
Is it hard to qualify for a DSCR loan?
Qualifying for a DSCR loan is typically easier than conventional financing since these loans focus primarily on the property’s income rather than your personal finances. The main qualification factor is whether the property generates sufficient rental income to cover the mortgage payments. While you’ll need a decent credit score (usually 620+) and a down payment as low as 15%, you won’t face the strict income verification, employment history, and debt-to-income ratios that traditional loans require.
At MacLagan Home Loans, we’ve helped many investors qualify when traditional lenders turned them away!
What are the cons of a DSCR loan?
DSCR loans present a few considerations investors should evaluate against their investment strategy.
- Expect higher interest rates compared to conventional loans. Usually 0.25% to 1.5% higher
- DSCR loans have prepayment penalties starting at 5 years and the lower your prepayment penalty the higher the interest rate you might get.
- Larger origination fees anywhere from 1 to 3 points (1 points is equal to 1% of your loan amount).
If you reached the maximum amount of conventional loans you have or you just do not qualify for a conventional loans, dscr loans will be your best loan option for your rental properties as a real estate investor.
What is the minimum DSCR for a loan?
Our regular DSCR loan has a minimum DSCR of 1.00. You can go down to a 0.75 DSCR but it can come with increased down payments and higher interest rates.
We also offer a no ratio DSCR loan. These have down payments starting at 30% and have higher interest rates as well.
Can you pay off a DSCR loan early?
Yes, you can pay off your DSCR loan early but you have to keep in mind what your prepayment is. Most DSCR loans start with a 5 year prepayment penalty and you can choose to have a 3 year, 1 year or no prepayment penalty loan but it comes with the trade off of a higher interest rate.
At MacLagan Home Loans, we can help put together a game plan on which prepayment penalty is right for your investing strategy.
Is there a limit to how many DSCR loans you can have?
Unlike conventional loans that that have a maximum of 10 mortgages that you have at once, DSCR loans for the most part do not limit how many you can have at one time. Some lenders do put a cap on the maximum DSCR loans you can with them.
At MacLagan Home Loans, we are mortgage brokers and are partnered with a ton of different lenders that offer DSCR loans, so if you reach your maximum amount of DSCR loans with one lender, we will find you another lender so you never run into an issue with having too many DSCR loans.