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
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.
Key features
- No deposit sourcing
- No minimum DSCR ratio up to 75% LTV
- No tradeline requirement w/ 3 credit scores
- Unlimited cash out up to 80%
- Cash-out used for reserves
- AIR DNA & STR income accepted
- Loan amounts up to $5m for preferred brokers
- Rural up to 20 acres allowed
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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