What Is a DSCR Loan?

A DSCR loan — Debt Service Coverage Ratio loan — is a mortgage for investment properties that qualifies based on the property’s rental income, not yours. Instead of reviewing your W-2s, tax returns, or pay stubs, lenders ask one straightforward question: does this property earn enough rent to cover its own mortgage payment?

If the answer is yes, you can qualify — regardless of what your personal tax return looks like. It’s one of the most investor-friendly mortgage products available, and it’s specifically designed to scale with your portfolio.

Who It’s For

• Real estate investors purchasing rental properties
• Investors refinancing existing rental properties
• Short-term rental (Airbnb/VRBO) property owners
• Investors growing a multi-property portfolio
• Anyone who wants to qualify without using personal income documentation

Key Benefits

• No W-2s, tax returns, or personal income verification required
• Qualify based entirely on the property’s rental income
• Available for long-term and short-term rentals
• Purchase and refinance options available, including cash-out
• Scalable — each property qualifies on its own merits
• LLC ownership allowed — ideal for investors who hold properties in an entity

How DSCR Is Calculated

DSCR stands for Debt Service Coverage Ratio. It compares what the property earns in rent to what it costs to carry — and it’s the number lenders use to determine whether the property qualifies.

Formula: Gross Monthly Rent ÷ Monthly PITIA = DSCR

(PITIA = Principal, Interest, Taxes, Insurance, and HOA/Association dues)

Example: $2,500 monthly rent ÷ $2,000 monthly PITIA = DSCR of 1.25

What the number means:

• DSCR above 1.0 = the property generates more income than it costs to carry (positive cash flow)
• DSCR of 1.0 = the property breaks even
• DSCR below 1.0 = the property doesn’t fully cover its costs — some programs still allow this at a lower LTV and higher rate

Most lenders require a minimum DSCR of 1.0–1.25 for standard terms. The stronger the ratio, the better your rate and terms.

How to Qualify

Credit Score: Minimum 660–680 for most programs.

Down Payment: Typically 20% (80% LTV) for well-qualified borrowers; some programs allow less with adjusted terms.

DSCR Ratio: A minimum of 1.0 is standard; programs exist for sub-1.0 ratios at higher rates.

Property Types Eligible:

• Single-family rentals
• 2–4 unit properties
• Condos and townhomes
• Short-term rentals (with market rent documentation)
• Multi-family properties (program-dependent)

No personal income documentation required — qualification is based on the property alone.

How the Process Works

1. Connect with a Loan Officer Tell us about the property — location, expected rent, and purchase price or current value. We’ll run the DSCR calculation and let you know where you stand before you go further.

2. Document the Property’s Income Provide a lease agreement (for existing rentals) or a market rent analysis from an appraiser (for new purchases). No personal income documents needed.

3. Close and Grow Once approved, we guide you through appraisal, underwriting, and closing. Because each property qualifies independently, there’s no ceiling on how many DSCR loans you can have.

Why New Story Lending

We’re an independent mortgage bank in Upstate South Carolina with real experience in non-QM and investor lending. We understand that real estate investors think in terms of cash flow and portfolio growth — not just personal income — and our DSCR loan program is built around that.

Whether you’re buying your first rental property or refinancing your fifth, we’ll structure the loan around the deal, not your pay stub. Our team is bilingual (English and Spanish) and available to walk you through every step.

Frequently Asked Questions

What does DSCR stand for? Debt Service Coverage Ratio — a measure of whether a property’s rental income is sufficient to cover its mortgage payment and carrying costs.

Do I need to show personal income to qualify? No. DSCR loans require no W-2s, tax returns, pay stubs, or employment verification. Qualification is based entirely on the property’s rental income.

What DSCR ratio do I need to qualify? Most programs require a minimum DSCR of 1.0–1.25. Some lenders offer sub-1.0 programs for properties with strong equity or other compensating factors, typically at higher rates.

Can I use a DSCR loan for a short-term rental? Yes. Many lenders accept short-term rental income for DSCR qualification, typically using a market rent estimate or a percentage of projected short-term income.

Can I hold the property in an LLC? Yes — LLC ownership is allowed under most DSCR programs, which is ideal for investors who prefer to hold properties in a business entity for liability purposes.

How many DSCR loans can I have? Because DSCR loans qualify based on the property rather than your personal income, there’s no fixed limit. Each property stands on its own, making this one of the most scalable financing options for portfolio investors.

Can I do a cash-out refinance with a DSCR loan? Yes. DSCR cash-out refinances are available, allowing investors to pull equity from existing properties to fund additional acquisitions.

Does the DSCR program work with the BRRRR strategy? Yes. DSCR loans are a natural fit for the BRRRR method (Buy, Rehab, Rent, Refinance, Repeat). Investors commonly use a DSCR cash-out refinance in the refinance step to pull equity from a renovated rental property and redeploy it into the next acquisition — without needing to show personal income. If you’re using this strategy, let us know upfront so we can structure the loan accordingly.

Have more questions? Contact us — our loan officers are happy to walk you through your options.