What is a DSCR Loan?

A DSCR (Debt Service Coverage Ratio) loan is a type of mortgage specifically designed for real estate investors. Unlike traditional loans that focus heavily on your personal income and employment history, DSCR loans qualify borrowers based on the property’s ability to generate income.

The DSCR is calculated by dividing the property’s gross rental income by the total debt obligations (principal, interest, taxes, insurance, and HOA fees). A DSCR of 1.0 means the property’s income exactly covers the debt payments, while a higher ratio indicates positive cash flow.