DSCR Loans for 1–4 Unit Investment Properties
A DSCR loan for investment property financing allows borrowers to qualify for loans on 1–4 unit rental properties based primarily on the property’s rental income and property cash flow rather than the borrower’s personal income. It gives brokers a flexible option for investor deals that do not fit traditional underwriting guidelines.
Series Z (≥0.75)
Series 1 (No Ratio)
Series 2 (≥0.75)
Series 3 (≥0.75)
Series 4 (≥0.80)
Series 5 (≥0.75)
Series 6 (No Ratio)
Series 7 (≥1.00)
Series 8
Series 9
Series 10
DSCR (1-4)
About program
DSCR (Debt Service Coverage Ratio) loans are often the cleanest option when a property's rental income provides a clearer qualification path than the borrower's personal income documentation.
Brokers commonly use DSCR financing when Standard Doc or Bank Statement programs would require additional income analysis. Because qualification is based primarily on property cash flow, these files often rely less on tax returns and other borrower income documentation.
Program Highlights
Qualification & Documentation
These guidelines outline common DSCR loan requirements, including how the borrower qualifies, what rental-income documentation may be used, and what helps a DSCR file move through underwriting more efficiently.
- Qualification based on rental income and property cash flow
- Lease agreements and market-rent documentation accepted
- AirDNA and eligible STR income support
- No-ratio options up to 75% Loan-to-Value ratio (LTV)
- Minimum 620 FICO
- Two months of reserves
- No tradeline requirement with three credit scores
- Acceptance of clear rental and asset documentation
Loan Structure & Flexibility
These features outline how the loan can be structured, including LTV limits, reserve options, cash-out considerations, and investor-friendly program flexibility.
- Up to 85% LTV
- Purchase, refinance, and cash-out options
- Cash-out proceeds may be used for reserves
- No deposit sourcing
- Vacant-property options available
- STR-friendly qualification options
- Flexible investor financing structures
Property & Loan Parameters
These guidelines cover the types of properties, occupancy requirements, and loan sizes supported by the program.
- Non-owner-occupied 1–4 unit properties
- Single-family homes, condos, condotels, studios, and 2–4 unit properties
- Rural properties up to 20 acres
- Loan amounts up to $5 million for preferred brokers
- Residential investment-property focus
- Additional program guidelines may apply.
Required to Disclose
Credit report
(cannot be older than 60 days) - must be merged into the LOS.
Borrowers' ID
(passport or driver's license).
Purchase contract
(if applicable)
Submission form completed
Copy of lease agreement(s)
(if applicable)
Copies short term income statement(s)
(if applicable)
Required to Underwrite
(in addition to above)
Credit report
(cannot be older than 60 days) - must be merged into the LOS.
Borrowers' ID
(passport or driver's license).
Purchase contract
(if applicable)
Submission form completed
Copy of lease agreement(s)
(if applicable)
Copies short term income statement(s)
(if applicable)
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FAQ
What is a DSCR loan for 1–4 unit investment properties?
A DSCR (Debt Service Coverage Ratio) loan qualifies a 1–4 unit investment property based on rental income and property cash flow rather than the borrower's personal income. This can provide a more streamlined path than a traditional mortgage loan for an investment property, particularly for purchases, refinances, and portfolio expansion.
Are first-time investors eligible for a DSCR loan?
Yes. First-time investors (including those purchasing their first investment property) can qualify under this DSCR program, as long as they meet certain eligibility requirements. This opens the door for new investors entering the rental property market with non-QM financing.
When is a DSCR loan the best fit for an investor?
DSCR loans are often a strong fit when rental income provides a clearer qualification path than traditional income documentation. Brokers commonly use DSCR financing for rental-property purchases, refinances, and portfolio expansion.
Can Airbnb or short-term rental income be used to qualify for a DSCR loan?
Yes. Eligible short-term rental properties may qualify using approved rental-income documentation, including AirDNA reports, a 12-month lookback on short-term rental income, or a short-term rental 1007 appraisal form. This helps brokers qualify properties that perform better as short-term rentals than as traditional long-term rentals.
Can vacant properties qualify?
Yes, in some cases. Eligibility for vacant properties depends on the specific program guidelines, property characteristics, and overall transaction profile. Brokers should review the applicable series requirements to determine available qualification options.
When should a broker use DSCR instead of Standard Doc or Bank Statements?
A DSCR mortgage is often the better option when rental income supports qualification more effectively than traditional income analysis. DSCR financing can simplify many investment-property transactions by focusing on property cash flow rather than personal income documentation.
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