What Is a DSCR Loan? Buying Texas Rentals Without Tax Returns

The short answer

DSCR stands for Debt Service Coverage Ratio. A DSCR loan qualifies you mainly on whether the rental property's income covers its own payment, rather than on your personal tax returns or pay stubs.

How it works

The lender compares the property's expected monthly rent to its monthly housing costs (principal, interest, taxes, insurance and any HOA). If the rent covers the payment, the property can qualify on its own merits. Lenders set their own minimum ratios.

Why investors like it

• No tax returns or W-2s required on many programs.
• Great for investors with multiple properties or complex write-offs.
• Can be used to buy or to refinance a rental.
• Can close in an LLC on many programs.

What to know

DSCR loans typically need a larger down payment than owner-occupied loans, and rates and terms are different. The numbers still need to work for you, so we run them before you write an offer.

Frequently asked questions

Can I use DSCR for a short-term rental?

Some lenders allow it using projected short-term rental income. Guidelines vary, so ask us before you buy.

Looking at a North Texas rental? Call (469) 414-5554.

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. Business-purpose loans are not for owner-occupied use. Programs, rates and guidelines vary and change.