Investor Mortgage Broker · Lending in 38 States
DSCR Loans for Real Estate Investors
Qualify on the property’s rent, not your tax returns. Most lenders want 20% to 25% down. We go to 15% on single-family rentals, and we close in your LLC.
- 15% down
- No tax returns
- 1 to 12 units
- $75K to $3.5M
or call (847) 899-6882
30-second survey. No credit check. Your info is never sold.
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Key takeaways
- DSCR loans qualify on the property’s rental income rather than your personal income, so no tax returns, W-2s, or debt-to-income ratio are required.
- Down payments start at 15% on a single-family rental with a 720+ credit score and a 1.00 DSCR, 20% on 2 to 4 units, and 25% on 5 to 12 units.
- MacLagan Home Loans brokers DSCR loans from $75,000 to $3.5 million across 38 states, with credit scores accepted from 620.
- There is no limit on the number of DSCR loans you can hold, unlike conventional financing, which caps most investors at 10 mortgages.
- Advertised DSCR rates starting near 5.75% require discount points and low leverage; most Illinois DSCR loans close between roughly 6.75% and 8.5%.
What is a DSCR loan?
A DSCR loan is a mortgage for an investment property that qualifies on the property’s rental income instead of your personal income. DSCR stands for debt service coverage ratio, and it measures whether the rent covers the mortgage payment.
There are no tax returns, no W-2s, no pay stubs, and no personal debt-to-income calculation. That matters because most serious investors write off as much as the tax code allows, which lowers the income a conventional lender will count and can disqualify you from financing the very properties that are making you money.
DSCR loans are business-purpose loans made to an investor, not consumer mortgages. You can close in an LLC, there is no cap on how many you hold, and the property must be non-owner-occupied.
DSCR = Monthly rent ÷ PITIA
PITIA is the full monthly housing payment: principal, interest, property taxes, insurance, and HOA dues. A DSCR of 1.00 means rent exactly covers that payment. A DSCR of 1.25 means rent is 25% higher than the payment.
Lenders use the lower of the market rent on the appraiser’s Form 1007 or the actual rent on a signed lease, so an above-market lease will not inflate your ratio.
Why one lender says no and another says yes
Here is the part most investors never hear. Unlike FHA or conventional loans, DSCR has no agency rulebook. There is no Fannie Mae or HUD setting a single standard that every lender follows. Each lender writes its own matrix, and those matrices differ enormously on the things that decide your deal: the minimum ratio, the maximum LTV at your credit score, which property types count, whether short-term rentals are allowed, and how many units they will go to.
That is why a bank can decline a file that another lender funds at better terms the same week. As a mortgage broker, we shop the same file across our lender network instead of handing you one company’s answer.
A DSCR loan is usually the right fit if you
- Write off enough on your taxes that your reported income no longer supports a conventional loan
- Already have several financed properties and are near the 10-mortgage conventional limit
- Want to hold title in an LLC for liability or partnership reasons
- Are self-employed and tired of documenting two years of returns for every purchase
- Are buying a cash-flowing rental where the property’s numbers are stronger than your paperwork
DSCR calculator
Will your rental qualify? Enter the numbers below to see your debt service coverage ratio and which DSCR program it lands in.
Most calculators make you work out the payment yourself. This one builds the full PITIA from your purchase price and costs, and it includes an interest-only option, which raises your ratio because the payment is lower.
Total rent from all units. Lenders use the lower of market rent or the signed lease.
Illinois averages about 2.1% of price. Use the actual tax bill when you have it.
Your DSCR
1.05
Qualifies
Enter your numbers to see where this property lands.
- Loan amount
- $280,000
- Principal & interest
- $1,910
- Taxes
- $612
- Insurance
- $150
- HOA
- $0
- Total PITIA
- $2,673
- Monthly cash flow
- $127
For estimating only. Your actual DSCR, rate, and maximum loan-to-value depend on your credit score, loan amount, property type, lease documentation, and the lender’s appraisal of market rent. Cash flow shown here is rent minus PITIA and does not include vacancy, maintenance, management, or capital expenses. Not a commitment to lend. All loans subject to credit approval and underwriting guidelines.
DSCR loan requirements
What do you actually need to qualify? Credit, a down payment, reserves, and a property whose rent supports the payment. Your personal income never enters the calculation.
DSCR has no agency rulebook, so these are the ranges across our lender network rather than one company's matrix. The widest program usually wins the deal, and that is the one we shop you into.
| Requirement | What it takes | What to know |
|---|---|---|
| Credit score | 620 minimum. 720+ unlocks the highest leverage and best pricing. | DSCR pricing moves in credit tiers, so crossing 680, 700, or 720 can change your rate and your maximum loan-to-value at the same time. |
| Down payment | 15% on a single-family rental, 20% on 2 to 4 units, 25% on 5 to 12 units. | 15% requires a 720+ score on a detached single-family rental. See the 15% down requirements. |
| DSCR ratio | 1.00 on standard programs, meaning rent covers the full payment. | Reduced-ratio programs go to 0.75, and a no-ratio option exists below that with a larger down payment. Some lenders require a higher ratio at maximum leverage. |
| Income documentation | None. No tax returns, W-2s, pay stubs, or employment verification. | You will still provide bank statements, entity documents, and ID. Your personal debt-to-income ratio is never calculated. |
| Cash reserves | Typically 3 to 6 months of the property's full payment, held after closing. | Larger loan amounts carry higher reserve requirements. On some programs, cash-out proceeds can count toward reserves. |
| Loan amount | $75,000 to $3.5 million. | That $75,000 floor is lower than most DSCR lenders will go, which matters for smaller Midwest rentals. |
| Property types | Single-family, condos, townhomes, and 2 to 12 unit multifamily. | Non-warrantable condos are eligible. Minimum square footage applies: 700 for single-family, 500 for condos, 400 per unit on 2 to 4 units. |
| Occupancy | Investment property only. You cannot live in it. | DSCR is a business-purpose loan. If you plan to occupy a unit, look at FHA or conventional financing instead. |
| Entity closing | Close in an LLC, corporation, or your personal name. | Closing in an entity is standard on DSCR and does not raise your rate. You will provide operating agreement and formation documents. |
| Number of properties | No limit on financed properties. | Conventional financing caps most investors at 10 mortgages. DSCR does not, though individual lenders may cap their own exposure to one borrower. |
| Investor experience | First-time investors are eligible. | Without a year of owning and managing a rental in the last three years, expect a lower maximum loan-to-value and firmer reserve requirements. |
| Past credit events | Generally 2 to 3 years from a bankruptcy, foreclosure, short sale, or deed-in-lieu. | Seasoning requirements vary by program and event type, and are shorter than conventional financing requires. |
| Loan terms | 15, 30, and 40-year fixed, plus adjustable and interest-only options. | Interest-only lowers the payment, which raises your DSCR and can qualify a property that a fully amortizing loan will not. |
Maximum LTV by credit score
Your credit score sets how much you can borrow against the property. Here is the maximum loan-to-value by score on loans up to $1.5 million, which covers most residential rental purchases.
| Credit score | Purchase | Rate & term refinance | Cash-out refinance | Down payment |
|---|---|---|---|---|
| 720+ | 85% | 85% | 75-80% | 15% |
| 700 to 719 | 80% | 80% | 75% | 20% |
| 680 to 699 | 80% | 80% | 75% | 20% |
| 640 to 679 | 70-75% | 70-75% | 65-70% | 25-30% |
| 620 to 639 | 65-70% | 65-70% | 60-65% | 30-35% |
Larger loans carry lower leverage. Above $1.5 million, the maximum loan-to-value steps down at each tier. A 720+ borrower who reaches 85% on a $1 million loan is generally looking at 80% around $2 million to $2.5 million, 75% near $3 million, and 65% at the $3.5 million ceiling.
Reserve requirements rise with loan size too, moving from roughly three months on a standard loan to six or more on larger balances.
What else can move your maximum LTV
- The property type. Condos and 2 to 4 unit buildings cap lower than single-family. Rural properties are more limited still.
- Short-term rentals. Airbnb and VRBO properties are eligible on some programs, usually with a leverage reduction and twelve months of documented rental history.
- Gift funds. The down payment can be gifted, but using 100% gifted funds typically costs you a leverage reduction. Contributing at least 5% of your own money avoids that.
- Concentration in one area. Financing three or more properties in the same market with one lender can trigger a lower maximum and a firmer minimum ratio.
- Declining markets. If the appraiser marks the market as declining, expect a leverage reduction at higher loan-to-value levels.
- Vacant or unleased property. Financeable, but refinances on an unleased property cap lower than ones with a signed lease in place.
Want to know your actual maximum?
See What I Qualify ForAll figures are general program ranges across multiple wholesale lenders and are not an offer of credit or a rate quote. Your actual terms depend on a full application, credit review, property appraisal, lease documentation, and the specific lender program your file is placed with. Programs and guidelines change without notice. All loans subject to credit approval and underwriting guidelines. Equal Housing Opportunity.
DSCR loans with 15% down
Do DSCR loans always require 20% down? No. On a single-family rental, we can go to 15% down, which is 85% loan-to-value. Most DSCR lenders stop at 20% or 25%.
That extra 5% of leverage is real money. On a $350,000 rental it keeps $17,500 in your account, which is often the difference between buying one property this year and buying two.
It is also the narrowest program on this page, so here is exactly what it takes.
- Credit score
- 720+
- Minimum DSCR
- 1.00
- Property type
- Single-family
- Loan amount
- Up to $1.5M
- Prepay penalty
- Required
No exceptions on this one. At 700 the maximum drops to 80%.
The rent has to cover the full payment, including taxes and insurance.
Detached only. Condos and 2 to 4 unit buildings cap at 80%.
Above that, the maximum steps down at each loan size tier.
A prepayment penalty is mandatory above 80% leverage.
What 15% down keeps in your pocket
Compared with the 20% and 25% down that most DSCR lenders require, here is the cash difference at closing.
| Purchase price | 25% down | 20% down | 15% down | You keep vs. 20% |
|---|---|---|---|---|
| $250,000 | $62,500 | $50,000 | $37,500 | $12,500 |
| $350,000 | $87,500 | $70,000 | $52,500 | $17,500 |
| $500,000 | $125,000 | $100,000 | $75,000 | $25,000 |
The catch nobody mentions
Less money down means a higher payment, and a higher payment means a lower DSCR.
Putting 15% down borrows more, so the monthly payment rises and your ratio falls. The property has to carry the larger loan on its own, because your personal income never enters the calculation.
On a $350,000 rental at 7.25%, the payment at 20% down is about $2,628 a month, so you need roughly that much in rent to clear a 1.00 ratio. At 15% down the payment rises to about $2,747, so the rent you need climbs by about $119 a month.
That is a small gap on a strong property and a dealbreaker on a marginal one. If your deal clears it, you keep $17,500 for the next purchase.
How interest-only can get you there
Here is the structuring move most investors never hear about. An interest-only payment is lower than a fully amortizing one, which raises your DSCR on the exact same property.
On that same $350,000 rental at 15% down, the fully amortizing payment needs about $2,747 in rent to hit a 1.00 ratio. Structured interest-only, the payment drops and the rent you need falls to roughly $2,515, which is about $232 a month less. That is often the gap between a property that qualifies and one that does not.
Interest-only is not free. You build no equity during the interest-only period, and the payment steps up when amortization begins. Whether it fits depends on how long you plan to hold. Try both options in the DSCR calculator above to see the difference on your deal.
When 20% or 25% down is the better move
- Your score is under 720. At 700 to 719 the maximum is 80%, so 20% down is the floor regardless of how strong the property is.
- You are buying a 2 to 4 unit building. Multi-unit caps at 80% on our programs, and 5 to 12 units requires 25%.
- The property barely cash flows. If the ratio lands under 1.00, more money down lowers the payment and brings the file back into range.
- You plan to sell or refinance within a few years. The mandatory prepayment penalty above 80% leverage can cost more than the cash you saved.
- You want the lowest rate. Higher leverage prices higher. If the rate matters more than the cash, less leverage wins.
Payment examples assume a 7.25% rate, a 30-year term, Illinois property taxes estimated at 2.1% of purchase price per year, and insurance at 0.36% per year. Illustrative only and not a rate quote or commitment to lend. A 720 credit score and a 1.00 DSCR do not guarantee approval at 85% loan-to-value. Program terms vary by lender and are subject to change. All loans subject to credit approval, underwriting guidelines, and property eligibility.
DSCR down payment by property type
How much you need down depends on what you are buying. A detached single-family rental gets the most leverage. Condos, multi-unit buildings, and short-term rentals each step down from there.
These are the minimums at the top credit tier. A lower score raises the down payment on every row.
| Property type | Minimum down | Max LTV | What to know |
|---|---|---|---|
| Single-family, detached | 15% | 85% | The only property type that reaches 85%. Requires a 720+ score. See the full requirements. |
| Condo or townhome | 20% | 80% | Non-warrantable condos are eligible, which conventional financing will not touch. Some markets and building types cap lower. |
| 2 to 4 units | 20% | 80% | Rent from every unit counts toward the ratio. The classic Chicago two-flat and three-flat sit here. |
| 5 to 12 units | 25% | 75% | Most DSCR lenders stop at four units. We finance up to twelve. More on multifamily DSCR. |
| Short-term rental | 20-25% | 75-80% | Airbnb and VRBO properties qualify on some programs. Expect a leverage reduction and twelve months of documented rental history. |
| No-ratio (DSCR under 0.75) | 30% | 70% | For properties that do not cash flow on paper, including vacant units and heavy value-add deals. |
Where the down payment can come from
- Gift funds are allowed. Using 100% gifted money usually costs a leverage reduction. Contributing at least 5% of your own funds avoids it.
- Seller concessions are capped at 6% of the purchase price and apply to closing costs, not the down payment itself.
- Cash-out from another property can fund the next purchase, and on some programs it counts toward your reserve requirement too.
- Reserves are separate. Plan on three to six months of the property's full payment sitting in an account after closing, on top of the down payment and closing costs.
DSCR loans for 5 to 12 unit multifamily
Buying a six-flat and being told you need a commercial loan? You may not. We write DSCR loans on buildings up to twelve units, which is well past the four-unit ceiling most DSCR lenders stop at.
This is the gap that sends a lot of investors to a local bank by default. Once a building crosses four units it falls outside conventional residential financing, and most DSCR programs follow the same line. The usual answer is a commercial loan, which brings a different structure entirely.
- Units
- Up to 12
- Down payment
- 25%
- Loan amount
- Up to $3.5M
- Income docs
- None
Most DSCR lenders cap at four.
75% maximum loan-to-value on a purchase.
Starting at $75,000.
Qualifies on the building's rent roll.
DSCR versus a commercial multifamily loan
A commercial loan on a small apartment building typically comes with a balloon payment in five to ten years, amortization over twenty or twenty-five years rather than thirty, a personal guarantee, annual financial reporting to the bank, and a relationship you have to maintain to get the next one.
A DSCR loan on the same building is underwritten like a rental: the rent roll against the payment, no tax returns, and long-term fixed financing with no balloon. For a buy-and-hold investor, not having a refinance deadline sitting five years out is often worth more than a slightly better rate.
How a 5 to 12 unit building is underwritten
- The whole rent roll counts. Your ratio is total rent from every unit divided by the building's full monthly payment.
- Vacancy matters more. On a six-unit building, one empty unit is about 17% of your income. Lenders look harder at reserves and at the stability of the existing leases.
- Leases get verified. Expect to provide a current rent roll and signed leases. The appraisal includes a rent analysis for the building, not just a comparable sales value.
- Experience helps. First-time investors can qualify, but a track record of owning and managing rentals improves your terms on a larger building.
- Close in an entity. Most investors hold buildings this size in an LLC, which is standard on DSCR and does not raise your rate.
Chicago six-flats and courtyard buildings
Chicago has more small apartment buildings than almost any city in the country, and the six-flat is a signature piece of its housing stock. Those buildings sit in exactly the gap this program covers: too big for conventional residential financing, too small to be interesting to most commercial lenders.
Having owned and renovated more than 100 properties, I have been on the buyer's side of these deals as well as the financing side. That matters on a building where the rent roll, the unit mix, and the deferred maintenance all move the number.
Program ranges across multiple wholesale lenders, not an offer of credit or a rate quote. Commercial loan terms described above are typical market structures and vary by lender. Your actual terms depend on a full application, credit review, appraisal, rent roll and lease documentation, and the specific lender program your file is placed with. Programs change without notice. All loans subject to credit approval and underwriting guidelines. Equal Housing Opportunity.
DSCR loan rates
Seen DSCR rates advertised starting at 5.75%? That number is real, but almost nobody closes there. Here is what investors actually pay, and what it takes to get to the low end.
Teaser rates like that assume a near-perfect file: top credit tier, low leverage, a strong ratio, a long prepayment penalty, and discount points paid at closing to buy the rate down. Change any one of those and the rate moves.
What DSCR loans actually close at
Across recent Illinois DSCR closings, the realistic range looks like this:
6.75% – 8.5% Typical closed range. Lower with points and low leverage, higher at maximum leverage or on harder property types.Expect roughly 0.5% to 1.5% above a conventional investment property loan. You are paying that premium for skipping income documentation, clearing the ten-property cap, and closing in an entity.
We will quote you the real number for your file, not the brochure number.
What moves your DSCR rate
| Factor | How it moves your rate |
|---|---|
| Credit score | The single biggest driver. DSCR prices in tiers, so crossing 680, 700, or 720 can move your rate and your maximum leverage at the same time. |
| Loan-to-value | Less leverage prices better. The same borrower on the same property will see a meaningfully lower rate at 65% than at 80%. |
| DSCR ratio | A property at 1.25 or higher prices better than one that barely clears 1.00. Strong cash flow is worth real money. |
| Prepayment penalty | A longer penalty buys a lower rate. Choosing a shorter one, or none, raises it. See the next section. |
| Discount points | One point equals 1% of the loan amount paid at closing. This is how advertised rates get to their headline number. |
| Property type | Detached single-family prices best. Condos, multi-unit buildings, short-term rentals, and rural properties each carry adjustments. |
| Loan amount | Very small loans can price higher, since the lender's fixed costs are similar regardless of size. Very large loans tighten leverage instead. |
| Which lender you use | The one factor fully in your control. The same file priced at three lenders on the same morning can come back meaningfully apart, because each writes its own matrix. |
Should you buy the rate down?
Points make sense when you are holding long term. Paying one point on a $300,000 loan costs $3,000 at closing. If it lowers your payment by roughly $60 a month, you are even at about 50 months and ahead after that.
If you expect to sell or refinance inside four or five years, that money is usually better kept in reserves or applied to the next down payment. The math turns on your hold period more than on the rate itself.
DSCR prepayment penalties explained
This is the DSCR term that catches investors off guard, and it is the one worth understanding before you lock. Most DSCR loans carry a prepayment penalty, meaning you pay a fee if you sell or refinance early.
The standard structure is a five-year step-down, often written as 5-4-3-2-1. Pay the loan off in year one and the fee is about 5% of the balance, in year two about 4%, and so on until it disappears after year five.
Here is the part that matters: the penalty length is a choice, and it is priced. A shorter penalty costs you a higher rate.
| Penalty term | Typical rate effect | Best for |
|---|---|---|
| 5 years | Lowest rate | Long-term buy-and-hold. You have no intention of selling or refinancing inside five years. |
| 3 years | Around +0.25% | A middle path. Common for investors who want flexibility without paying full price for it. |
| 1 year | Around +0.50% | A BRRRR or value-add deal where you plan to refinance once the property stabilizes. |
| None | Around +0.75% to 1% | A short hold, a likely sale, or a property you expect to refinance quickly. |
Run the math before you default to the lowest rate. On a $300,000 loan, a 5% penalty is $15,000 if you exit in year one. A no-penalty option priced 0.75% higher costs roughly $190 a month, or about $2,280 a year. If there is any real chance you sell or refinance inside two years, the shorter penalty is usually the cheaper decision.
One more detail: at maximum leverage, a prepayment penalty is often required rather than optional. If you are taking 15% down, plan on having one.
Can you pay off a DSCR loan early?
Yes. A prepayment penalty does not lock you in, it just prices the exit. You can sell, refinance, or pay the loan off whenever you want, and you pay the fee that applies in that year.
A few states restrict or prohibit prepayment penalties on these loans, and the rules can differ depending on whether you close in your own name or in an entity. We will tell you what applies in the state you are buying in.
Rates change daily and are not guaranteed until locked. All rate figures and adjustments shown are illustrative market ranges, not a quote or a commitment to lend. Your actual rate depends on your credit, loan amount, loan-to-value, debt service coverage ratio, property type, prepayment structure, points paid, occupancy, state, and market conditions at the time of lock. Prepayment penalty availability and structure vary by state and by lender. All loans subject to credit approval and underwriting guidelines. Equal Housing Opportunity.
DSCR loans for DACA, ITIN, and foreign national investors
Been told you can't get a mortgage because you aren't a citizen or permanent resident? For investment property, that is often not true. DSCR loans are business-purpose loans, and several programs finance borrowers who conventional and government lending will not.
This has become a much bigger issue since 2025. HUD's Mortgagee Letter 2025-09 removed non-permanent residents from FHA eligibility for case numbers assigned on or after May 25, 2025. For a lot of investors, DSCR is now one of the few remaining paths to property financing.
Eligibility varies more by lender here than anywhere else in DSCR lending. Some programs decline these borrowers outright. Others approve them at full terms. Finding the one that says yes is the entire job.
| Borrower type | Eligible | Typical terms | What to know |
|---|---|---|---|
| U.S. citizen or green card holder | Yes | Full program terms, including 15% down on single-family | Standard DSCR underwriting with no additional requirements. |
| DACA recipient with work authorization | Yes | Up to 80% LTV on a purchase, 75% on cash-out | Available on specific programs only. Many lenders decline DACA borrowers entirely, which is why shopping the file matters. |
| ITIN borrower | Yes | Typically 700+ credit score and up to 75% LTV | Lower maximum leverage and a higher credit bar than a standard file. Loan amount caps are often tighter too. |
| Foreign national | Yes | Larger down payment and additional documentation | Qualifies on the property's income. U.S. credit history is generally not required, but expect more reserves and a lower maximum leverage. |
Why this is a broker problem, not a borrower problem
On one lender's matrix we work with, DACA borrowers are eligible on one program and declined on the other four. Foreign nationals are declined across all five. On another lender's sheet, the answers are different.
That means a single bank or retail lender can honestly tell you no while a different lender would fund the exact same file at full terms. The file did not change. The matrix did.
A denial from one lender is information about that lender, not a verdict on your deal.
What you will typically need
- Identification and status documentation appropriate to your category, such as a green card, employment authorization document, or passport and visa.
- A U.S. bank account with seasoned funds for your down payment, closing costs, and reserves.
- Credit documentation. A U.S. credit score where you have one. Foreign national programs generally substitute international credit references or accept files without U.S. credit.
- Entity documents if you are closing in an LLC, which most investors in these categories do.
- The property's rental documentation, meaning a signed lease or the appraiser's market rent analysis. This is what you actually qualify on.
Illinois and Chicago investors
Chicago has one of the largest immigrant communities in the country, and a lot of first-generation wealth in this city was built on two-flats and three-flats. Being told your status disqualifies you from financing the thing your family has done for three generations is a frustrating place to land.
DSCR financing does not care about your W-2 or your tax returns. It cares whether the building covers its payment. If it does, there is usually a lender for it.
This section describes loan program eligibility only and is not immigration or legal advice. Program availability, maximum loan-to-value, credit requirements, and documentation standards vary by lender and change without notice, and not all programs are available in all states. Nothing here is an offer of credit or a commitment to lend. All loans subject to credit approval, underwriting guidelines, and property eligibility. MacLagan Home Loans does not discriminate on the basis of race, color, religion, national origin, sex, familial status, disability, or any other protected class. Equal Housing Opportunity.
How one classification call saved an investor 5% down and 1.875% on the rate
Two lenders can look at the same building and count a different number of units. On a recent file, that single judgment call was worth tens of thousands of dollars.
The deal
An investor referred by a past client came to us and got pre-approved for a DSCR loan. He then found a strong deal: a four-unit building throwing off more than $4,000 a month in rent.
The complication
The basement held two additional unpermitted units. On paper the building was a four-unit. In practice, anyone walking it counted six.
Every lender we approached classified it as a six-unit property, and that reclassification changed the entire deal. His down payment jumped from 20% to 25%, and his rate went from 6.875% to 8.75%.
What we did
The property itself was excellent. The cash flow was strong, the investor was solid, and the only thing standing between him and good terms was how one line on an underwriting form got filled in.
Because we are a broker rather than a single lender, we took the file to every lender we are approved with and made the case for the four-unit classification on each one. One of them agreed to underwrite it as a four-unit property.
The result
He closed at 20% down and 6.875% instead of 25% down and 8.75%. He kept 5% of the purchase price in his pocket and shaved nearly two points off his rate for the life of the loan.
What that was worth
| Priced as a 6-unit | Priced as a 4-unit | Difference | |
|---|---|---|---|
| Down payment | 25% ($150,000) | 20% ($120,000) | $30,000 less cash |
| Interest rate | 8.75% | 6.875% | 1.875% lower |
| Principal & interest | $3,540/mo | $3,153/mo | $387/mo less |
| Over 5 years | — | — | About $53,000 better off |
Where DSCR files get won or lost
- Property classification. Unit count, property type, and whether a building is residential or commercial are judgment calls that different lenders make differently, and each one moves your down payment and rate.
- Borrower eligibility. Residency status, credit profile, and investor experience are approved by some lenders and declined by others. More on borrower eligibility.
- How rent is counted. Market rent on the appraisal versus the signed lease, how short-term rental income is treated, and whether a vacant unit gets credited all change the ratio.
- Loan structure. Interest-only instead of fully amortizing lowers the payment and raises the ratio, which can qualify a property that would otherwise fall short.
- Which lender sees it. DSCR has no agency rulebook. Every one of the above is a matrix decision, not a rule, and matrices differ.
Got a deal that doesn't fit neatly in a box? That's usually the one worth shopping.
30-second survey. No credit check. Your info is never sold.
Details changed or omitted to protect the borrower's privacy. Every file is different and past results do not guarantee approval or pricing. Property classification is determined by the lender and the appraiser based on their own guidelines. Nothing here is an offer of credit or a commitment to lend. All loans subject to credit approval, underwriting guidelines, and property eligibility.
DSCR vs. conventional investment loan
Which one should you use? If you qualify for conventional financing on income, it is almost always the cheaper loan. DSCR is what you reach for when conventional stops working, and for most active investors that happens sooner than they expect.
The honest framing is that you are buying flexibility. DSCR costs more in rate and fees, and in exchange it removes the three things that stop investors from scaling: income documentation, the debt-to-income ratio, and the ten-property cap.
| Feature | DSCR loan | Conventional investment loan |
|---|---|---|
| Qualifies on | The property's rental income | Your personal income and debt-to-income ratio |
| Income documentation | None. No tax returns, W-2s, or pay stubs. | Two years of tax returns, W-2s, pay stubs, and employment verification |
| Write-offs | Irrelevant. Deductions do not reduce what you qualify for. | Deductions lower your qualifying income, so aggressive write-offs shrink your buying power |
| Maximum financed properties | No limit | 10 financed properties |
| Close in an LLC | Yes, and it is standard | No. Title must be held personally at closing. |
| Units allowed | 1 to 12 | 1 to 4 |
| Minimum down payment | 15% on single-family, 20% on 2 to 4 units, 25% on 5 to 12 | 15% on single-family, 25% on 2 to 4 units |
| Interest rate | Roughly 0.5% to 1.5% higher | Lower, and generally the cheapest option if you qualify |
| Prepayment penalty | Usually yes, and required at maximum leverage | None |
| Loan amount | $75,000 to $3.5 million | Up to the conforming limit, $832,750 for one unit in Illinois in 2026 |
| Short-term rentals | Eligible on some programs, with documented rental history | Difficult. Short-term rental income is generally not usable to qualify. |
| Borrower eligibility | Programs exist for DACA, ITIN, and foreign national investors | Citizens and permanent residents, with some non-permanent resident options |
| Speed | Often faster, since there is no income file to document and verify | Slower, especially for self-employed borrowers |
Which one fits you?
DSCR is usually the better choice if you
- Write off enough that your tax returns no longer support the loan
- Already have close to 10 financed properties
- Want to hold the property in an LLC
- Are buying a building with 5 to 12 units
- Are self-employed and tired of documenting two years of returns per deal
- Are buying a short-term rental, or are a DACA, ITIN, or foreign national investor
Conventional is usually the better choice if you
- Have strong W-2 income and room in your debt-to-income ratio
- Are buying your first or second rental
- Want the lowest available rate
- Plan to sell or refinance within a few years and want no prepayment penalty
- Are buying a property that barely cash flows, since your income can carry it
- See our conventional loans page
Most investors end up using both. Conventional financing is cheaper, so it makes sense for the first few properties while your income still supports them. At some point the write-offs that make the portfolio work start working against you on the application, or you run into the ten-property cap, and conventional simply stops being available.
That is the moment DSCR earns its premium. The rate is higher, but a loan you can actually get beats a cheaper one you cannot. We price both for any investor who could qualify for either, so the choice is made on numbers rather than habit.
Comparison is general and for educational purposes. Conventional guidelines are set by Fannie Mae and Freddie Mac and are subject to change; individual lenders may apply stricter requirements. DSCR program terms vary by lender. Nothing here is an offer of credit or a commitment to lend. All loans subject to credit approval, underwriting guidelines, and property eligibility. Equal Housing Opportunity.
DSCR loans in Illinois and Chicago
Illinois is one of the better DSCR markets in the country, and one of the trickiest. Rents are high relative to purchase prices, which helps your ratio. Property taxes are among the highest in the nation, which hurts it. Both land in the same calculation.
Why Illinois property taxes matter more on a DSCR loan
On a conventional loan, property taxes affect your payment. On a DSCR loan they affect whether you qualify at all, because taxes sit inside the PITIA you are divided against. A high tax bill lowers your ratio directly.
Illinois runs roughly 2.1% of value a year, against a national average near 1.1%. Here is what that does to the same property.
| Property taxes | Monthly tax | Total PITIA | DSCR |
|---|---|---|---|
| National average (1.1%) | $275 | $2,002 | 1.30 |
| Illinois (2.1%) | $525 | $2,252 | 1.15 |
Same property, same rent, same loan. The ratio drops from 1.30 to 1.15 purely on taxes. If you are using a national DSCR calculator with a default tax assumption, your real Illinois number is lower than what it is showing you.
The reassessment trap
Cook County reassesses on a rotating cycle, and a sale can trigger a change in assessed value. Your lender qualifies you on the current tax bill, which is often the seller's, not yours.
On that same $300,000 property, a 20% tax increase after reassessment takes the payment from $2,252 to about $2,357 and drops the ratio from 1.15 to 1.10. The loan already closed, so it does not affect your approval. It affects your cash flow for the next thirty years.
We model the likely post-sale tax bill before you write the offer, not after you close.
Two-flats, three-flats, and six-flats
Chicago has one of the deepest small multifamily markets in the country. Two-flats and three-flats finance at 20% down on a DSCR loan, with rent from every unit counting toward the ratio. Six-flats and other small apartment buildings fall into our 5 to 12 unit program at 25% down, which keeps them out of commercial financing and its balloon payments.
Those buildings are also where the tax question bites hardest, since a multi-unit reassessment can move several hundred dollars a month.
Where we finance rentals in Chicagoland
- Chicago
- Evanston
- Skokie
- Glenview
- Northbrook
- Highland Park
- Arlington Heights
- Buffalo Grove
- Des Plaines
- Niles
- Palatine
- Park Ridge
- Schaumburg
- Naperville
We finance rentals anywhere in Illinois, including Rockford, Springfield, Peoria, Joliet, Aurora, and the Metro East.
DSCR loans in 38 states
Buying out of state? DSCR loans are business-purpose loans, not consumer mortgages, which means the state licensing rules that restrict ordinary home loans work differently here. We finance investment property in 38 states.
That matters for a lot of Chicago investors. Plenty of them buy locally and also own rentals in Indiana, Florida, Texas, or Tennessee. You can run those through one broker instead of starting over with a new lender in every market.
- Alabama
- Alaska
- Arizona
- Arkansas
- Colorado
- Connecticut
- Delaware
- Florida
- Georgia
- Hawaii
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- New Hampshire
- New Mexico
- North Carolina
- Ohio
- Oklahoma
- Pennsylvania
- Rhode Island
- South Carolina
- Tennessee
- Texas
- Washington
- West Virginia
- Wisconsin
- Wyoming
Not currently available in: California, Idaho, Michigan, Nevada, New Jersey, New York, North Dakota, Oregon, South Dakota, Utah, Vermont, and Virginia.
State rules also change some loan terms. A few states restrict or prohibit prepayment penalties on these loans, and the rules can differ depending on whether you close in your own name or in an entity. We will tell you what applies where you are buying.
Buying out of state
- You do not need to live where you buy. DSCR qualifies on the property, so your home state is irrelevant to the approval.
- Local tax rates change the math. A property that clears a 1.20 ratio in Indiana might land at 1.05 in Illinois at the same price and rent. Run each market on its own numbers.
- Insurance varies more than people expect. Coastal and wildfire markets can carry premiums that move your ratio as much as the rate does.
- One broker, every market. Same application, same process, whether the property is in Schaumburg or Sarasota.
State availability reflects our current lender network and is subject to change. Not all programs are available in all states, and some programs carry state-specific restrictions. Property tax figures are estimates used for illustration; actual rates vary by county, township, and assessment. Nothing here is an offer of credit or a commitment to lend. All loans subject to credit approval, underwriting guidelines, and property eligibility. Equal Housing Opportunity.
Why investors use a broker for DSCR loans
DSCR has no agency rulebook. No Fannie Mae, no HUD, no single standard every lender follows. That one fact is the whole argument for using a broker on these loans.
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Every lender writes its own matrix
Minimum ratio, maximum leverage at your score, which property types count, how many units, whether short-term rentals or non-citizen borrowers are eligible. All of it is a lender decision, not a rule. Go direct and you get one company's answer to a question that has many answers.
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We shop the file, not just the rate
Pricing matters, but on DSCR the bigger wins come from structure: how the property gets classified, whether interest-only lifts the ratio into range, which prepayment term fits your hold period. One classification call recently saved an investor 5% down and 1.875% on the rate.
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An investor's read on the deal
Alex has bought, renovated, and rented more than 100 properties. That shows up in the conversation about rent assumptions, deferred maintenance, and what a building will actually appraise at, not just in the paperwork.
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Programs most lenders do not have
15% down on single-family, buildings up to twelve units, loans from $75,000, and financing for DACA, ITIN, and foreign national investors. Each of those is a no at a lot of shops.
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38 states, one relationship
Buy in Illinois and Indiana and Florida without starting over with a new lender in each market.
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Rated 5.0 on Google, A+ with the BBB
More than 56 reviews at a 5.0 rating, and BBB accredited with an A+ rating. Read our Google reviews.
The DSCR loan process
How long does a DSCR loan take? Without an income file to document, these move faster than conventional. Here is what happens at each step.
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Take the 30-second survey
30 secondsTell us what you are buying or refinancing and roughly where your credit sits. No credit check, and your information is never sold.
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Talk through the deal
Same or next business dayThis conversation decides more than most people expect. We cover the property and expected rent, whether you are closing in an entity, how long you plan to hold, and which prepayment structure fits that. Hold period drives the prepay choice, and the prepay choice drives your rate.
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Send documents
1 to 2 days, at your paceBank statements, entity documents, and ID. No tax returns, no W-2s, no pay stubs. The full checklist is below.
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Get pre-approved
Within 24 business hoursWe shop your file across our lender network and come back with the terms you actually qualify for, so you can write offers knowing your real numbers rather than a rough guess.
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Property under contract
Your timelineOnce you are under contract we run the actual property numbers, including taxes, insurance, and the rent the appraiser is likely to support, and confirm the ratio before anything is ordered.
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Appraisal and rent analysis
1 to 2 weeksThe appraiser values the property and completes a market rent analysis. This is the step that most often changes a DSCR deal, because the lender uses the lower of market rent or your signed lease.
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Underwriting and closing
21 days or less from accepted offerWe clear conditions, lock your rate, and close in your name or your entity. No income verification means fewer things to go wrong late in the file.
What you will need
- Driver's license or passport
- Two months of bank statements, all pages
- Entity documents if closing in an LLC: articles, operating agreement, and EIN letter
- Signed leases or a current rent roll, if the property is occupied
- A homeowners or landlord insurance quote
- Mortgage statement and payoff, on a refinance
- Proof of funds for the down payment and reserves
Reserves are verified separately from your down payment, so make sure those funds are seasoned.
What you will not need
- Tax returns
- W-2s or 1099s
- Pay stubs
- Employment verification
- A debt-to-income calculation
- An explanation of your write-offs
This is the entire point of a DSCR loan. The property qualifies, not your tax return.
What slows a DSCR closing down
- Market rent coming in below the lease on the appraisal, which lowers the ratio
- Vacant or unleased units, which cap leverage on a refinance
- Incomplete entity documents, the most common delay by far
- Insurance quotes arriving late, especially on multi-unit buildings
- Property condition issues the appraiser flags
- Title problems tied to unpermitted work
We flag these before you are under contract, not during underwriting.
Before you write the offer
- Get the current tax bill and estimate what it becomes after reassessment
- Confirm the rent is supportable, not just what the seller claims
- Decide your hold period, since it determines the prepay structure
- Have the entity formed, or know you are closing personally
- Know your reserve requirement on top of the down payment
Ten minutes here saves a repriced deal later.
Timelines depend on appraisal scheduling, entity and lease documentation, title, insurance, and how quickly documents are provided. Pre-approval is not a commitment to lend. All loans subject to credit approval, underwriting guidelines, and property eligibility. Equal Housing Opportunity.
DSCR loan FAQs
Straight answers to the questions real estate investors ask most about DSCR loans.
Do DSCR loans require 20% down?
No. While 20% to 25% down is the most common requirement, a detached single-family rental can qualify with 15% down if you have a 720 or higher credit score. Condos and 2 to 4 unit buildings start at 20%, and 5 to 12 unit buildings start at 25%.
What is the downside of a DSCR loan?
The main downsides are cost and flexibility. Expect a rate roughly 0.5% to 1.5% higher than a conventional investment loan, origination fees of about 1 to 3 points, cash reserves of three to six months held after closing, and usually a prepayment penalty. The property also has to cash flow on its own, because your personal income cannot compensate for weak rent.
How hard is it to qualify for a DSCR loan?
DSCR loans are generally easier to qualify for than conventional investment loans if you have the down payment and the property cash flows. There is no income documentation, no employment verification, and no debt-to-income calculation. The difficulty shifts from your paperwork to the property's numbers.
Who qualifies for a DSCR loan?
Real estate investors buying or refinancing non-owner-occupied property qualify, including first-time investors. You generally need a 620 or higher credit score, the down payment for your property type, cash reserves, and a property whose rent supports the payment. You cannot live in the property.
How is DSCR calculated?
DSCR is the property's monthly rent divided by its full monthly payment, known as PITIA: principal, interest, taxes, insurance, and HOA dues. A DSCR of 1.00 means rent exactly covers the payment. Lenders use the lower of the appraiser's market rent or the rent on a signed lease. Try the DSCR calculator on this page.
What is the minimum DSCR ratio for a loan?
Standard DSCR programs require a 1.00 ratio, meaning rent covers the full payment. Reduced-ratio programs accept ratios down to 0.75 with a larger down payment and a higher rate, and no-ratio programs finance properties below 0.75 starting around 30% down.
What credit score do you need for a DSCR loan?
The minimum is 620. Scores of 720 and above unlock the highest leverage and the best pricing, including 15% down on a single-family rental. DSCR prices in credit tiers, so crossing 680, 700, or 720 can improve both your rate and your maximum loan-to-value at the same time.
Can you get a DSCR loan with bad credit?
Below 620 it becomes difficult on standard DSCR programs. Between 620 and 680 you can still qualify, but expect a lower maximum loan-to-value, meaning 25% to 35% down depending on your score and the property, plus a higher rate. The property's cash flow matters more than it does at higher credit tiers.
What banks do DSCR loans?
Most retail banks do not offer DSCR loans at all, because these are business-purpose loans rather than consumer mortgages. They come from non-QM and wholesale lenders, which investors usually reach through a mortgage broker. That is also why terms vary so widely between lenders.
Is there a limit to how many DSCR loans you can have?
No. Unlike conventional financing, which caps most investors at 10 financed properties, DSCR loans have no portfolio limit. Individual lenders may cap their own exposure to one borrower, in which case we move the next loan to another lender.
Can you pay off a DSCR loan early?
Yes. A prepayment penalty does not prevent you from selling, refinancing, or paying the loan off, it just prices the exit. Most DSCR loans start with a five-year step-down penalty, and you can choose a three-year, one-year, or no-penalty option in exchange for a higher rate. See prepayment penalties explained.
Can you buy a property in an LLC with a DSCR loan?
Yes, and it is standard. Closing in an LLC or corporation does not raise your rate on a DSCR loan. You will provide your articles of organization, operating agreement, and EIN letter. Conventional financing does not allow this, since title must be held personally at closing.
Can you get a DSCR loan for an Airbnb or short-term rental?
Yes, on some programs. Short-term rentals typically require twelve months of documented rental history and carry a leverage reduction, meaning a higher down payment than a long-term rental. Lenders may use a rental analysis or a third-party revenue report to establish income.
Can you get a DSCR loan on a 5 to 12 unit building?
Yes. Most DSCR lenders stop at four units, but we finance buildings up to twelve units at 25% down. This keeps small apartment buildings out of commercial financing, which typically brings a balloon payment in five to ten years. See DSCR loans for 5 to 12 unit multifamily.
Can non-US citizens get a DSCR loan?
Yes, on specific programs. DACA recipients, ITIN borrowers, and foreign national investors can all qualify for DSCR financing, though terms and maximum leverage vary by category and lender. Many lenders decline these borrowers entirely, so the file has to be placed carefully. See DSCR loans for DACA, ITIN, and foreign national investors.
What is the minimum loan amount for a DSCR loan?
Our minimum is $75,000, which is lower than most DSCR lenders will go. Many programs floor at $100,000 or more, which rules out a lot of smaller Midwest rentals. The maximum is $3.5 million.
Can a first-time investor get a DSCR loan?
Yes. You do not need an existing rental portfolio to qualify. Without a year of owning and managing investment property in the last three years, expect a lower maximum loan-to-value, firmer reserve requirements, and fewer program options, but first-time investors close DSCR loans regularly.
Do DSCR loans require an appraisal?
Yes, and it does more than value the property. The appraiser also completes a market rent analysis, which the lender uses to calculate your ratio. If market rent comes in below the rent you expected, your DSCR drops, which can change your terms. This is the most common late-stage surprise on a DSCR file.
Have a deal or a question that isn't answered here?
Call Alex at (847) 899-6882 or take the 30-second surveyOther financing for real estate investors
A DSCR loan is not always the right tool. Here is what else we write for investors, and when each one fits better.
Fix & Flip Loans
For properties that need work before they can rent or sell. Finance 100% of the renovation with as little as 10% down on the purchase.
Most BRRRR investors use one of these to buy and rehab, then refinance into a DSCR loan once the property is stabilized and leased.
Fix & flip financing →Bank Statement Loans
For self-employed borrowers buying a primary residence or second home, where tax returns do not reflect real income.
DSCR covers your rentals. This is what covers the house you actually live in.
Bank statement loans →Conventional Loans
Usually the cheapest investment financing if your income supports it and you are under the 10-property limit.
Worth pricing against DSCR on every deal where you could qualify for either.
Conventional financing →Not sure which fits? Tell us about the deal and we will price the options side by side. Take the 30-second survey or call (847) 899-6882.