DSCR (debt service coverage ratio) loans qualify an investment property on its rent rather than your personal income. Requirements vary by lender, but commonly:
- DSCR: 1.0–1.25 minimum (rent ÷ PITIA). Some lenders allow below 1.0 at higher rates.
- Down payment: usually 20–25% (75–80% LTV) for purchases; cash-out refis often max 70–75%.
- Credit score: frequently 660–700+, with better pricing above 740.
- Reserves: often 3–12 months of PITIA.
- Property: 1–4 unit residential, sometimes condos and 5–8 units; short-term rentals with special rules.
- Prepayment penalty: step-down structures like 5-4-3-2-1 are common.
Check your ratio and maximum loan with the DSCR calculator. Rates and terms change frequently; compare several lenders.