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DSCR Loan Requirements
Everything you need to qualify for a DSCR loan, laid out clearly. No surprises at closing.
What You Need to Qualify
DSCR loans have fewer requirements than conventional mortgages because they qualify on property income rather than personal income. But they are not no-doc loans. Here is exactly what lenders look at.
Credit Score
Minimum 660 FICO. Best rates start at 740+. If you are borrowing through an LLC and your personal score is below 660, you may still qualify if a majority owner (51% or more) in the LLC meets the 660 minimum. Your credit score affects your rate and maximum LTV, but it does not determine whether the property qualifies. That is based on the DSCR ratio.
Down Payment and Equity
Purchases: as low as 15% down (85% LTV). Rate and term refinances: up to 85% LTV. Cash-out refinances: up to 75% LTV, available after 6 months of ownership. Limited cash-out is available as early as 3 months. The more equity you bring, the better your rate. Higher LTV means higher pricing adjustments.
Cash Reserves
You need 6 months of PITI (principal, interest, taxes, insurance) in accessible accounts. This can be checking, savings, IRA, 401k, or any account you have access to. Reserves prove you can cover the mortgage if the property sits vacant. This is one of the most common disqualifiers for borrowers who look good on paper.
Investment Experience
You must have owned an investment property for at least 12 months within the last 3 years. If you do not have investment property experience but own your primary residence, 12 months of on-time mortgage payments on your primary residence can be used instead. First-time investors with zero property ownership history will not qualify.
Property Requirements
Eligible: 1-4 unit single-family residences (primary program), 5-10 unit residential (separate program with specific guidelines), condos, and short-term rentals (Airbnb, VRBO). Not eligible: commercial properties, mixed-use properties, and rural properties. The property must be an investment property. Primary residences and second homes do not qualify. Minimum loan amount: $75,000.
Entity and Ownership
You can close in your personal name, LLC (single or multi-member), trust, or corporation. Entity type affects your rate through loan-level pricing adjustments: individual is the baseline, LLC adds 0.125% to 0.250%, trusts add 0.125%, and corporations add 0.250%. If closing in an LLC, you will need articles of organization, operating agreement, and EIN letter.
Not Required
What You Do Not Need
- —No tax returns (personal or business)
- —No W-2s or pay stubs
- —No profit and loss statements
- —No debt-to-income ratio calculation
- —No limit on number of financed properties
- —No short-term amortization. 30-year fixed available
- —No seasoning requirement for purchases
- —No employment verification
Watch Out
Common Reasons Deals Fall Through
Most DSCR applications that fail do so for one of these reasons. Knowing them in advance saves everyone time.
No cash reserves
This is the most common disqualifier. Borrowers who look great on paper but cannot show 6 months of PITI in an accessible account cannot proceed.
Credit below 660 with no LLC workaround
If your personal score is under 660 and you are not borrowing through an LLC with a qualifying majority owner, the deal cannot move forward.
No rent documentation
If you are refinancing a property that is currently rented, you need a paper trail of rent payments for the last 12 months. Cash payments with no records do not count.
No investment experience
You must have owned an investment property for 12 months in the last 3 years, or show 12 months of on-time mortgage payments on a primary residence.
Rural or ineligible property type
Rural properties, commercial properties, and mixed-use properties are not eligible. If you are unsure whether your property qualifies as rural, we can check for you.
Documents
What Documents You Will Need
For Purchases
- •Executed purchase sale agreement
- •Government-issued ID (all parties, front and back)
- •LLC documents if applicable (operating agreement, EIN letter, articles of organization)
- •EMD receipt from title company
- •Track record form
- •Homeowners insurance and title insurance contacts
- •12 months mortgage statements from an existing rental
- •Current lease agreement from sellers
- •Last 2 months bank statements showing 6 months PITI reserves
- •Borrower authorization form
- •HOA documents if applicable
For Refinances
- •Government-issued ID (all parties, front and back)
- •LLC documents if applicable
- •ALTA/HUD closing statement from original purchase
- •Track record form
- •Homeowners insurance, title insurance, and mortgage payoff contacts
- •Mortgage statements for last 12 months
- •Current lease agreement
- •Proof of rent received for last 12 months (bank transfers, Venmo statements, cancelled checks)
- •Last 2 months bank statements showing 6 months PITI reserves
- •Borrower authorization form
- •HOA documents if applicable
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