DSCR Mortgage Loans
We have special loans we think real estate investors will love.
What is a DSCR loan?
DSCR stands for “debt service coverage ratio” and is a type of Non-Qualified Mortgage loan or Non-QM loan that allows you to qualify for a home loan without relying on personal income. Another industry name for it is Investor Cash Flow loan. At CrossCountry Mortgage, our product is called Signature Expanded Investor Cash Flow loan.
DSCR loans are ideally suited for real estate investors who can secure a real estate loan based on their rental property’s positive cash flow, not their income tax returns or other financial paperwork.
Non-QM loans
Non-QM loans or Non-Qualified Mortgage loans offer expanded criteria for certain homebuyers, such as real estate investors, to qualify for a home loan without relying on personal income. The exact criteria for qualifying can vary by lender, but a Non-QM loan will offer greater flexibility than traditional loans.
How do DSCR loans work?
DSCR loans allow real estate investors to qualify for a mortgage based on their rental property’s cash flow. This is different from a conventional loan that requires proof of income.
For a DSCR loan, mortgage lenders consider a debt service coverage ratio or DSCR rather than income to qualify a real estate investor for a loan. This ratio gives lenders insight into whether or not the borrower will be able to use the rental income from the property to cover their monthly loan payments.
What is debt service coverage ratio?
A DSCR compares the income of the property to its total debt, which influences the eligibility for the DSCR loan. Lenders require a healthy DSCR to approve a loan. A good DSCR is usually 1.0 or higher, though it can vary based on other criteria.
How do you calculate your debt service coverage ratio?
DSCR = Monthly Rental Income ÷ PITIA*
For example, if a property generates a Monthly Rental Income of $100,000 annually and its debt service is $81,783 the equation would look like this:
DSCR = $100,000 ÷ $81,783 = 122
*Principal, Interest, Property Taxes, Homeowners Insurance & Association Dues
DSCR loan requirements
Lenders have specific criteria for both you and the rental property that include minimum credit scores, down payments, and more. While requirements can vary by lender, most borrowers should expect to meet the following criteria to receive a DSCR loan:
- DSCR of 1.0 and above
- Credit scores of at least 620 (though some lenders require higher scores)
- A down payment of 15% (though some lenders may have lower requirements)
- A minimum loan amount of $100,000
- A maximum loan amount of $3,000,000
- Occupancy type such as investment properties that generate income, whether a single-family unit, multi-unit structure, commercial property, vacation home or short-term rental property
Some lenders may be willing to work with borrowers with different credit histories depending on the property.
Pros and cons of a DSCR loan
DSCR (Debt Service Coverage Ratio) loans offer a valuable financing solution for real estate investors. Below is an overview of the key advantages and disadvantages of DSCR loans.
Pros of DSCR loans
DSCR loans come with several key advantages that make them especially attractive to real estate investors:
- Simplified qualification – Unlike conventional loans, DSCR loans typically do not require proof of personal income.
- Minimal documentation – Borrowers benefit from reduced paperwork, streamlining the application process.
- Faster approvals – With fewer requirements, DSCR loans often have quicker processing and approval times.
- No loan limit restrictions – Investors can take out multiple DSCR loans, making this option ideal for those with diverse or growing property portfolios.
- Access to jumbo loans – Financing is available for high-value properties, offering flexibility for luxury or large-scale investments.
DSCR lenders often offer customizable loan terms, giving borrowers flexibility to structure payments according to their financial needs
Cons of DSCR loans
While DSCR loans offer many benefits, they also come with certain limitations that borrowers should consider. These loans are primarily designed for real estate investors, which can make them less accessible to owner-occupants or those purchasing non-income-generating properties.
- Higher down payments – Borrowers are typically required to put down 15% or more.
- Stricter credit requirements – Some lenders may require a strong credit profile to qualify.
- Property restrictions – DSCR loans are only available for income-producing properties.
- Prepayment penalties – Many DSCR loans include fees for early repayment, limiting flexibility.
- Loan eligibility – Properties must meet a minimum DSCR ratio — usually 1.0 or higher.
How to secure a DSCR loan
-
Talk to one of CCM’s loan officers
Our loan officers have experience and expertise in these alternative loans and are happy to assist you with a DSCR loan.
-
Complete a loan application
At CCM, we offer a convenient online application, or you can contact our loan officers directly to help start the process.
-
Calculate your DSCR
We can help you calculate the DSCR using the formula above. Your rent schedule will verify the fair market value of the property and show what you can afford as monthly payments on a new mortgage. It will also influence the interest rate.
-
Get approved to lock in your interest rate
We’ll help you determine if you meet our requirements for a DSCR loan and, if you do, start a streamlined approval process that will enable you to lock in a mortgage interest rate for the duration of your loan.
-
Receive the loan and make repayments
We’ll help you set up convenient monthly payments according to your repayment schedule. For rental property owners, this means ensuring that your property is occupied with reliable tenants for a positive cash flow to generate income.
DSCR loan FAQs
Here are answers to a few questions you may have, but as with any mortgage, your loan officer is your best resource.
