DSCR purchase loans
A DSCR purchase loan finances a rental you are buying based mainly on whether its market rent covers the full monthly payment. Because there is usually no lease yet, the appraiser's rent estimate drives the ratio, and the down payment you choose moves it more than anything else.
Who is this loan a good fit for?
- Investors buying a single-family rental, condo, townhome or 2-4 unit building that no owner will live in
- Self-employed buyers whose tax returns understate their real cash flow
- Buyers closing in an LLC rather than their personal name
- Investors adding another rental who want each property to qualify on its own numbers
How the ratio is built on a purchase
Top: the appraiser's market rent estimate. Bottom: principal and interest on the new loan, taxes estimated on the purchase price, a landlord insurance quote and any HOA dues. Run it before you write the offer, not after.
Business-purpose loans for non-owner-occupied investment property only. Debt Service Coverage Ratio is a mortgage broker: we arrange and shop financing from wholesale lenders, and every loan is subject to the lender's underwriting and approval.
How does this loan work?
Run the ratio at offer price
Use leased comparables for rent, and estimate taxes on the price you will pay rather than the seller's old bill. If the ratio holds up, the property can likely carry its own financing.
Send us the scenario
Property, price, rent estimate and how much you plan to put down. We take it to multiple wholesale lenders and show how each reads the ratio.
Appraisal sets the rent
The lender orders an appraisal with a rent schedule. Its market rent estimate usually becomes the figure on top of your DSCR.
Underwriting and conditions
The underwriter reviews the property, credit, reserves and any entity documents. We help you clear each condition.
Close through the lender
You sign with the wholesale lender you chose and the loan funds through that lender. Then the rent starts covering the payment.
What should you expect during underwriting?
- A down payment from your own funds; the amount varies by program and changes the ratio directly
- Cash reserves left after closing, often measured in months of PITIA
- A credit review, since credit affects which programs and terms are available
- An appraisal that includes a market rent estimate
- A signed business-purpose and non-owner-occupancy certification
What should you check before applying?
- Do not use the seller's tax bill if your county reassesses on sale; the higher figure can drop the ratio.
- Asking rents online are often higher than what the appraiser will support.
- If you or a family member will live in the property or any unit, this is not the right loan.
What should you know about dscr purchase loans?
Do I need a lease in place to buy with a DSCR loan?
Usually not. On a purchase, lenders typically use the appraiser's market rent estimate because there is no lease you are assuming.
How much do I need to put down on a DSCR purchase?
It varies by program, property and credit. A larger down payment lowers the payment and raises the ratio, which can open more options. We quote real figures once we see the scenario.
Can I buy with a DSCR loan in an LLC?
Many programs allow LLC vesting with a personal guarantee from the owners. Ask your attorney or tax professional whether an entity fits your plans.
Which other DSCR loan options are available?
DSCR cash-out refinance
Pull equity out of a rental you own, with the larger new loan still qualifying on the property's rent.
DSCR rate-and-term refinance
Replace a rental's current loan to change its pricing, term or structure without taking meaningful cash out.
Short-term rental DSCR loans
Finance a vacation or short-term rental where the ratio may use booking history, a market projection or long-term rent.
2-4 unit DSCR loans
Finance a duplex, triplex or fourplex where the rent from every unit is combined on top of the ratio.
Investment property loans
An overview of business-purpose financing for non-owner-occupied rentals, and where a DSCR loan fits among the options.
Ready to discuss your rental property ratio?
Send the rent, the property and what you want to do. We take the scenario to multiple wholesale lenders, show how each one reads your DSCR, and explain the tradeoffs before you commit to anything.