Investors
DSCR loans: qualifying on the property's rental income.
A debt service coverage ratio (DSCR) loan looks at whether a rental property's income covers its payment, rather than at your personal tax returns. It is a non-QM option many investors use to grow a portfolio. Terms vary widely by lender.
Talk with HieuMay be a good fit if…
- You are buying or refinancing a rental or investment property.
- Your tax returns show lower income because of write-offs.
- You hold, or want to hold, property in an LLC.
What to know
How DSCR is calculated
Rental income divided by the monthly payment including taxes, insurance, and HOA. Many lenders look for about 1.0 to 1.25 or higher.
Investment property only
DSCR loans are for non-owner-occupied properties, not a home you live in.
Trade-offs
Expect a larger down payment and a higher rate than conventional loans, and ask whether a prepayment penalty applies.
Questions worth asking
- What rent will the lender use — a lease or an appraiser's estimate?
- Is there a prepayment penalty, and for how long?
- Can I close in my LLC's name?
Frequently asked questions
What is a DSCR loan?
A non-QM investment property loan that qualifies mainly on the property's rental income compared with its monthly payment, rather than on your personal income.
How much down payment does a DSCR loan need?
It varies by lender and ratio; many programs ask for around 20–25% or more. Stronger ratios and credit can improve terms.
Can I use a DSCR loan on my primary home?
No. DSCR loans are for investment properties that you do not live in.
Related reading
Want advice for your situation?
Hieu Nguyen, Senior Mortgage Loan Originator, Century Financial Group Co.. Loans are offered only in states where Hieu Nguyen and Century Financial Group are licensed — see NMLS Consumer Access. Not a commitment to lend; all loans are subject to credit and underwriting approval. Contact: (714) 409-9272.