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What is a DSCR loan?
A DSCR loan is a rental property loan approved on the property’s cash flow instead of your personal income. Here is how it works and how to get one in Texas.
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Qualify on the rent, not your income. Send the deal and a loan officer follows up with your rate and terms.
Estimate only. Loan amount is up to 85% of the purchase price on purchases, or up to 80% of the appraised value on cash-out refinances. Minimum loan $150,000. Rate and final terms depend on the property, the rent and your credit. Business-purpose loans on investment property in Texas.
The short version
A debt service coverage ratio (DSCR) loan compares what a rental brings in with what it costs to own each month. If the rent covers the payment, the loan works. Your job, your tax returns and your debt-to-income ratio are not part of the decision.
How the ratio is calculated
DSCR = monthly rent ÷ monthly payment. The payment is principal and interest plus property taxes, insurance and any HOA dues (often called PITIA).
| Example | Monthly |
|---|---|
| Rent | $2,400 |
| Principal and interest | $1,450 |
| Property taxes | $420 |
| Insurance | $160 |
| Total payment | $2,030 |
| DSCR | 1.18 |
A ratio above 1.00 means the rent more than covers the payment. Run your own numbers in the DSCR calculator, or read the full breakdown of the debt service coverage ratio.
Who DSCR loans are for
- Investors who are self-employed or write off most of their income
- Investors who already have several financed properties
- Anyone buying or holding rentals in an LLC
- BRRRR investors refinancing out of a rehab loan
- Investors who want to pull cash out of a rental to buy the next one
Our DSCR terms in Texas
Up to 85% LTV on purchases, up to 80% LTV on cash-out refinances with no seasoning, no income verification, fast closings and loans from $150,000. Business-purpose loans on investment property only. See the full list of DSCR loan requirements.
Questions investors ask
Is a DSCR loan a mortgage?
Yes. It is a mortgage on an investment property that is qualified on the property’s rent instead of your personal income.
Can I use a DSCR loan for a home I live in?
No. DSCR loans are business-purpose loans for investment property only.
Do I need tax returns?
No. We do not verify personal income for our DSCR loans.
What LTV can I get?
Up to 85% on a purchase and up to 80% on a cash-out refinance.