How do DSCR loans work for real estate investors?

Who are DSCR loans for?

• Investors growing a rental portfolio who've outgrown conventional limits
• Self-employed investors whose tax returns don't show their real income
• Investors whose debt-to-income is maxed out from other properties
• Anyone buying in an LLC
• Out-of-state investors buying in California, Texas, Florida, or Colorado

DSCR loans are for investment properties only, not the home you live in.

How does a DSCR loan work?

We compare the property's monthly rent with its full monthly payment (principal, interest, taxes, insurance, and HOA dues). If the rent covers the payment, the property qualifies on its own. No tax returns, W-2s, or pay stubs. How to calculate DSCR →

What can I finance?

Property	Purchase	Refinance	Cash-out
Single-family rentals	Yes	Yes	Yes
Duplex, triplex, fourplex	Yes	Yes	Yes
Condos and townhomes	Yes	Yes	Yes
Short-term rentals (Airbnb, VRBO)	Many programs	Many programs	Many programs

You can close in your personal name or an LLC. DSCR loans in an LLC →

What does a DSCR loan cost?

I'll be straight with you:

• Higher rates than conventional investment loans, because DSCR loans can't be sold to Fannie Mae or Freddie Mac
• Down payment of about 20% to 25% on most purchases
• Prepayment penalties are common, often for the first one to five years. I'll show you the penalty options in dollars. How prepayment penalties work →
• Closing costs commonly 2% to 5% of the loan amount, plus any points you choose
• Reserves: usually 3 to 12 months of payments left in the bank after closing

DSCR or conventional?

If your income is easy to document and your debt-to-income has room, a conventional investment loan usually costs less. DSCR wins when your tax returns understate your income, you're near the 10-property limit, or you want an LLC. We offer both. Compare DSCR vs. conventional →

Example scenario (illustrative)

An investor in Phoenix already owns eight rentals and lives in California. She finds a duplex near Austin for $420,000 with $3,600 in total rent. With 25% down and Texas property taxes, the full payment is about $3,150, a ratio of 1.14. She closes in her LLC without showing a single tax return, and uses a DSCR cash-out refinance on an older rental to fund her next down payment.

Our take

DSCR loans are the tool that lets serious investors keep buying. The deal only works if the property truly cash-flows, so I run every ratio with real rent, real insurance quotes, and the actual property tax rate, and I show you the prepayment terms before you commit.