This is the top question, as these loans are designed for real estate investors. The answer is that qualification is based on the property's projected rental income, not the investor's personal income.

While personal income isn't the focus, a good credit score is still required. Lenders often look for a minimum score of 620 to 680, with higher scores leading to better terms and interest rates.

DSCR loans are used by both new and experienced investors. They are ideal for borrowers who want to scale their portfolios quickly, regardless of their personal income situation.

No, DSCR loans are exclusively for investment properties, not for a borrower's primary residence or second home.

Borrowers typically need a signed purchase contract, property appraisal, lease agreements (if applicable), bank statements for cash reserves, and entity documents if the loan is in an LLC.

The formula is the property's monthly gross rental income divided by its total monthly debt obligations (Principal, Interest, Taxes, Insurance, and HOA dues—known as PITIA).

Most lenders require a DSCR ratio of 1.25 or higher, indicating that the property generates at least 25% more income than is needed to cover its expenses. Some lenders may accept a ratio of 1.0 or slightly below with a larger down payment or higher reserves.

For occupied properties, a current lease agreement is used. For vacant properties, lenders order a rental market analysis as part of the appraisal process.

Yes. Because DSCR loans are considered higher-risk, non-qualified mortgages (non-QM), interest rates are typically 1% to 2% higher than conventional rates.

Down payment requirements are typically higher than for conventional loans, usually ranging from 20% to 25% of the purchase price.

Yes, many DSCR loans include prepayment penalties for paying off the loan early, often structured as a declining percentage over the first few years.