DSCR Loans Explained: Buy Rentals Without Tax Returns
What is a DSCR loan, and what do you need to get one? A 2-minute walkthrough for new real estate investors.
Summary: A DSCR loan qualifies you based on the rental income the property earns, not your personal income, so there are no tax returns or W-2s.
How it works
DSCR stands for debt service coverage ratio. The lender divides the property’s gross monthly rent by its full monthly payment: principal, interest, taxes, insurance, and HOA dues if there are any. For example, a home that rents for $2,000 a month with a $1,800 total payment has a DSCR of 1.11. At 1.0 or higher, the rent covers the payment, and a higher ratio generally means better pricing and more leverage.
What you typically need:
A down payment of about 20–25%
A credit score in the mid-600s or higher (700+ gets the best terms)
Cash reserves, usually a few months of the full payment
A rental property, not your primary home. If it’s vacant, the appraiser’s market rent estimate is used.
Prefer a conventional investment loan? That option looks at your credit report instead. Reach out and I’ll walk you through both.
Ready to run your numbers? Call 828-772-4638 or email sarah.stokes@coast2coastml.com.
Guidelines vary by lender and loan program. Subject to credit approval. For educational purposes only; not a commitment to lend.