investment property financing
DSCR Loans For Real Estate Investors
DSCR loans allow real estate investors to qualify using rental income from the property instead of personal income or tax returns. Finance long-term rentals, short-term rentals, and investment properties with flexible qualification options.
46 states + Washington DC
LTV up to 85%
NMLS #2187991
DSCR at a glance
Qualifies on
Property rent
Personal income
Not required
Max purchase LTV
85%
Close in LLC
Yes
Property types
1-8 units, STR
The basics
Your property's income is the qualification
A DSCR loan asks one question: does the rent cover the payment?
Traditional investment loans punish investors who write off expenses, own several properties, or have complex income.
A DSCR loan skips your tax returns, W-2s, and debt-to-income ratio entirely — approval is based on whether the property’s rent covers its mortgage payment. That’s what makes it the tool investors use to scale past the point where conventional financing stalls.
What is a DSCR loan?
A DSCR loan is an investment property loan that lets you qualify based on the rental income of the property, not your personal income, W-2s, tax returns, or debt-to-income ratio.
This is huge for investors because traditional mortgage loans often punish people who write off expenses, own multiple properties, or have complex income. Growing a real estate portfolio with conventional loans gets extremely difficult once you have more than a couple of properties. With a DSCR loan, the question becomes much simpler:
Does the property make enough rental income to support the payment?
How DSCR Is Calculated
DSCR = Rental Income ÷ Monthly Property Payment
Example
monthly rent
Mortgage PITIA
DSCR
$3,000
$2,500
1.20
Watch your DSCR
Most DSCR lenders want to see a debt coverage ratio of **1.00 or higher**, which means the property’s rental income is enough to cover the monthly mortgage payment. You may still be able to qualify with a DSCR below 1.00, but lower ratios can come with higher interest rates, larger down payment requirements, or fewer lender options.
Your property's income is the main qualification
The numbers below are our program’s actual rules — the formula, the ratios, the constraints. We state them so you can run your own deal before you talk to anyone.
How Andes Mortgage calculates DSCR
On interest-only loans the denominator is ITIA. A DSCR of 1.00 means rent exactly covers the payment; 1.25 means the property earns 25% more than the payment requires.
The rent we count: the lower of your signed lease or the appraiser’s market-rent estimate (Form 1007). A higher lease can be used with three months’ proof of receipt
LTV — up to 85% on a purchase for a solid file (700+ credit, 1.00+ DSCR, 6 months' reserves). 75–80% is more typical. Cash-out generally tops out at 70–75%.
The DSCR ratio — 1.00 is the standard bar. Programs exist down to 0.75, and true no-ratio options below that — but each step down costs LTV and rate
Seasoning — cash-out generally needs 6+ months of ownership; some lenders require none. Under 12 months, value is based on your cost basis, not the new appraisal.
Where lenders differ (and why a broker matters): credit floors run from the low 600s to 680, cash-out seasoning runs from 6 moths to a year, and short-term-rental income treatment varies.
As a broker, Andes places your file with the lender whose overlays fit the deal — a direct lender can only offer its own.
DSCR LOAN HIGHLIGHTS
DSCR loans are the premier solution for real estate investors who want to grow
Created for real estate investors who are looking to increase their rental portfolio
DSCR loans are designed for new and experienced real estate investors who want to build a portfolio of long term or short term rental properties.
85% Loan-to-value allowed for purchase
Designed to help you keep more money in your pocket. Qualify with just a 15% down payment.
Qualify on rental income
We qualify you based on the income generated by the property
Flexible Property Types
Finance single family, multifamily up to 8 units and other commercial properties
Airbnb and short term rental options
Many programs allow projected short-term rental income for qualification purposes.
Every DSCR deal is capped by three constraints
Whichever one binds first sets your loan. Most calculators give you a number — the point is knowing which of these is the limit, because that tells you what to change.
Loan-to-value
How much you can borrow against the value. Strong files reach the program ceiling; weaker credit or larger loans pull it down.
The DSCR ratio
Rent ÷ PITIA. Taxes and insurance sit in the denominator — so they can break a deal that looks fine on paper.
Seasoning
How long you've owned it. Drives cash-out eligibility and whether value comes from your appraisal or your cost basis.
See which constraint binds — and why
Three deals in markets we lend in every week. Same product, three different limits. Tap through them.
SFR rental · $300,000 purchase · $2,400/mo rent · 720 credit
Sized at 85% ($255,000) · ~7.25% illustrative
Principal & interest
$1,740
Taxes (Fulton Co. ~1.5)
$1,740
Insurance
$140
HOA
$0
Total PITIA
$2,130
1.13
The ratio clears 1.00 with room to spare, so cash flow isn’t the limit — the 85% program ceiling is. Strong rent-to-payment lets you push leverage to the max.
Coastal SFR· $350,000 purchase · $2,600/mo rent · 720 credit
Principal & interest
$1,791
Taxes (Hillsborough Co. ~1.25)
$380
Wind + flood insurance
$500
HOA
$0
Total PITIA
$2,671
0.97
LTV is nowhere near the cap, yet the deal fails the 1.00 debt coverage ratio bar. This is due to insurance and taxes which sit in the denominator and eat up the income. Nobody else says this outloud: your taxes and insurance break and otherwise fine deal.
Fixes: Andes offers DSCR with less than a 1.00 debt coverage ratio although this deal may come with a higher rate due to the higher risk. For most lenders, this is a deal killer but for us, we can help you finance an investment property even though the debt coverage ratio is under 1.00.
Bought 4 months ago · $200,000 cash + rehab · now appraises $280,000 · $2,200/mo rent
Owned for
4 months
Cash-out minimum
6 months
Value used <12 mo
Cost basis, not $280K
TX property tax (~2.1%)
$0
Total PITIA
–
N/A
At 4 months the cash-out isn’t eligible yet — it needs 6+ months. And between 6 and 12 months, the loan is sized off your cost basis (~$200K + documented rehab), not the $280K appraisal — so the equity you created stays locked until month 12
DSCR loan calculator
Before you fall in love with the deal, make sure the numbers actually work. Use our DSCR loan calculator to estimate the property’s cash flow and see if the rental income may support the loan.
Where lenders actually differ
DSCR has no agency rulebook — every lender writes its own overlays. Here’s the real range. A direct lender can’t publish this, because it only has one answer.
Low 600s - 680
Credit floor
The minimum score varies widely by lender and program. A lower score is workable — it usually costs you LTV and rate, not the whole deal.
0 - 12 months
Cash-out seasoning
Some lenders let you pull cash immediately; others want 6–12 months. Under a year, value is based on cost basis, not appraisal.
Lease · 1007 · AirDNA
How short-term income counts
Short-term-rental treatment differs most of all — appraiser schedule vs. platform history, with haircuts and FICO floors that vary by lender.
As a broker, we place your file where the overlays fit. If one lender’s seasoning or credit floor kills the deal, another’s may not — that’s the whole advantage of not being a single-product lender.
loan comparisons
DSCR Loan Vs Conventional mortgage
|
Requirement
|
DSCR Loan
|
Conventional Loan
|
|---|---|---|
|
Income
|
Based on rents
|
Personal income documentation required
|
|
Credit score
|
620 minimum
|
640 minimum
|
|
Minimum down payment
|
15% down
|
15% down
|
|
Can close in LLC
|
Yes
|
Not allowed
|
|
Mortgage reports to credit
|
Sometimes, depends on lender
|
always
|
|
Maximum seller contributions
|
Up to 6% allowed
|
Up to 2% allowed
|
|
Prepayment Penalty
|
Yes, 1-5 years but can be bought out
|
Not allowed under fannie Mae guidelines
|
|
First-time investor allowed
|
Yes but depends on lender
|
Yes, allowed
|
|
Allows short term rental income
|
Airbnb, VRBO, short term rental allowed
|
No, long term rental only
|
In a nutshell 🥜
The simple difference between a DSCR Loan and a Conventional Mortgage
DSCR Loan
You qualify based on the rents of the property that you are purchasing on your current rents if you are looking to refinance.
As your lender, we require an appraisal with a market rent schedule called a 1007. The appraiser provides his opinion and analysis about the market rent of the property. The DSCR loan takes that number and divides it by the total mortgage payment of the property.
Your personal income is never required, and we do not calculate a debt-to-income to qualify you.
Getting a DSCR loan is a very streamline and fast process especially for those with low or complex personal income or who want to grow a rental portfolio.
Conventional mortgage
You are probably already familiar with this loan when you bought your primary home. To qualify you, the conventional mortgage requires personal income documentation such as W2s, pay stubs or tax returns if you receive self-employment or rental income. Your personal debt-to-income ratio is calculated to make a decision about your borrowing capacity.
To help you qualify, we ask an appraiser to estimate the market rent of the property you are purchasing and generally, we take 75% of the subject property’s market rent.
Getting a conventional mortgage for an investment property can help you get lower rates but the process can be daunting and it becomes extremely difficult to grow as an investor with this loan.
having troubles deciding the best option for you?
minimum Requirements for a DSCR loan
credit score
620+
minimum down payment
15% to 20%
Debt-to-income ratio
None
Mortgage insurance
Not Required
Occcupancy
Investment only
Loan limits
Up to $3 Million
DSCR Loans may be a good fit for you if...
You are looking to increase your rental portfolio
Your personal income is too low to qualify for investor mortgages
You are looking for multifamily financing that expands beyond 4 units
You have a complex situation that will not let you qualify for a conventional loan.
Can You Use a DSCR Loan for Airbnb or Short-Term Rentals?
- Yes, Andes Mortgage's DSCR loans allow for short-term income
- Income is calculated based on AirDNA data and appraisal
- This can be huge for investors buying in vacation markets, high-demand cities, or tourist areas.
- Not every lender treats Airbnb income the same, which is why working with a broker like Andes Mortgage matters.
When a DSCR loan may NOT be the right fit
- The property does not produce enough rent to cover the debt
- You are buying a primary residence
- You have very limited down payment
- You qualify easily for conventional financing and do not need DSCR flexibility.
Explore DSCR by the question you're actually asking
DSCR HELOC
Tap the equity without refinancing
DSCR loan requirements
Credit, reserve, ratios
DSCR for Airbnb
Short-term rental income
DSCR cash-out refinance
Pull equity to buy the next one
DSCR loan in an LLC
Entity vesting explained
DSCR loan calculator
Do the numbers actually work?
DSCR LOAN FAQ
Frequently Asked Questions
Get answers to some of the most common questions about DSCR loans for real estate investors
What does DSCR mean?
DSCR stands for Debt Service Coverage Ratio, which measures a property’s rental income compared to its mortgage payment.
Do DSCR loans require tax returns to qualify?
Never! DSCR loans qualify borrowers using rental income from the property whether it’s long term or short term rental.
Can I close a DSCR loan under an LLC
Yes. We allow you to title the property under an LLC or business entity.
Can I do a DSCR loan on a commercial property?
At Andes Mortgage, we offer HELOCs with credit scores as 640. However, higher credit scores are preferred as you will receive better rates, terms and more equity access.
Do you offer a 15% down payment DSCR Loan?
Yes! At Andes Mortgage, we offer DSCR loans with a minimum 15% down payment. This is great because it helps you keep more cash in your pocket.
Run your numbers before you fall in love with the deal
See your DSCR and what you’d actually qualify for – free, no pesky sales.
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