DSCR Loan Requirements: The Numbers Investors Need to Know
The short answer
A DSCR loan looks at whether the rental property's income covers its own payment, instead of your personal paycheck. Lenders typically want that ratio at or near 1.0 or better, plus a larger down payment than a primary home, though guidelines vary by lender.
The numbers lenders usually look at
DSCR ratio: monthly rent divided by the monthly housing payment (principal, interest, taxes, insurance and any HOA). Many lenders like 1.0 or higher; some have options below that.
Down payment: often 20-25% for investment property, depending on credit and the property.
Credit score: typically a minimum set by the lender, with stronger scores opening more options.
Reserves: several months of payments set aside in savings is common.
Property type: single-family, small multifamily and condos are often eligible, each with its own rules.
A quick example of the math
If a rental could bring in $2,400 a month and the full monthly payment is $2,000, the ratio is 1.2. Higher ratios generally give lenders more comfort. Our own DSCR overview covers the basics if you are brand new to these loans.
Frequently asked questions
Do I need tax returns for a DSCR loan?
Typically these loans focus on the property's income, so personal income documents are often not the main event. Requirements vary by lender.
Can I use a DSCR loan for my own home?
No. Business-purpose loans are not for owner-occupied use.
Curious how your numbers stack up? Call us at (469) 414-5554 or start here: https://mohavemortgages.net/home-texas.
By Kelly Welton, Mortgage Broker (NMLS #314183), Mohave Mortgage Texas Branch. Mohave Mortgage NMLS #1830581 · Texas Branch NMLS #2690682 · Equal Housing Opportunity. General information only, not a commitment to lend or financial advice. Programs, rates and guidelines vary and change.
