DSCR Loans (2026 Guide)
DSCR (Debt Service Coverage Ratio) loans allow real estate investors to qualify using rental income—not tax returns or W-2s.
Whether you’re acquiring, refinancing, or scaling a rental portfolio, DSCR financing offers fast approvals, flexible underwriting, and the ability to qualify based on the property’s cash flow.
If the rent covers (or nearly covers) the payment, you can often qualify—even when traditional lenders say no.
This 2026 DSCR Loan Guide explains DSCR requirements, how DSCR is calculated, eligible property types, short-term rental rules, and how to build the strongest approval in today’s market.
What Is a DSCR Loan?
A DSCR loan (Debt Service Coverage Ratio loan) is an investment mortgage where approval is based on the property’s rental income rather than the borrower’s personal income.
Instead of reviewing tax returns or pay stubs, lenders focus on:
- Monthly rental income
- Market rent (appraiser’s Form 1007)
- Monthly PITIA: principal, interest, taxes, insurance, HOA
If the rental income covers—or comes close to covering—the payment, you can often qualify. This makes DSCR financing one of the most powerful tools for scaling rental portfolios.
How DSCR Loans Work
DSCR lending was designed to give investors speed and simplicity. These loans allow acquisitions and refinances based on a property’s ability to service the debt.
Advantages of DSCR loans include:
- No tax returns required
- No income calculations
- Fast approvals (often 24–48 hours)
- LLC ownership allowed
- Flexible credit requirements
- Portfolio loans available for 5–100+ properties
If you’re building a rental portfolio, DSCR loans can help you scale faster while keeping financing simple.
How DSCR Is Calculated
The formula is simple:
DSCR = Gross Rent ÷ PITIA
Examples:
- Rent: $3,000 — Payment: $2,400 → DSCR = 1.25
- Rent: $2,200 — Payment: $2,300 → DSCR = 0.96 (still may qualify)
Most lenders prefer DSCR ≥ 1.00, but popular 2026 programs allow:
- DSCR 0.95
- DSCR 0.90
- DSCR 0.80
We regularly structure approvals below 1.00 DSCR when reserves, credit, or equity are strong.
DSCR Loan Requirements (2026)
Requirements vary by lender, but most 2026 DSCR programs look for:
- Credit Score: 660–760+
- Down Payment: 20–30%
- DSCR Ratio: 0.80–1.25+
- Reserves: 3–12 months
- Experience: Not required
- Property Condition: Must be rent-ready
Foreign national DSCR loans and LLC-titled properties are allowed on many programs.
DSCR Loan Rates (2026)
DSCR loan rates depend on DSCR ratio, credit score, leverage, and whether the property is long-term or short-term rented.
- DSCR 1.20+: best pricing
- DSCR 1.00–1.19: moderate pricing
- DSCR 0.80–0.99: higher pricing, but available
Short-term rentals, condos, and cash-out refinances may have slight rate adjustments depending on lender overlays.
Property Types Eligible for DSCR Loans
- Single-family rentals
- 2–4 unit investment properties
- Condos and townhomes
- Short-term rentals (Airbnb, VRBO)
- Long-term rentals
- Portfolio loans (5–100+ properties)
Short-Term Rental (Airbnb) DSCR Loans
Short-term rentals qualify using:
- 12 months STR income history
- AirDNA revenue projections
- Market-based STR analysis
For DSCR underwriting, lenders compare projected gross revenue versus PITIA. STR DSCR loans are extremely popular in California cities such as San Diego, Ventura, Palm Springs, and Santa Barbara.
Who DSCR Loans Are Best For
- Real estate investors
- Self-employed borrowers
- STR (Airbnb/VRBO) operators
- Buy-and-hold investors
- Investors growing a rental portfolio
- Borrowers turned down by banks
Start Your DSCR Loan Approval
We specialize in investor financing across California—from single rentals to full portfolios.
Tell us about the property, rent, and your goals. We’ll match you with the best DSCR loan options available in the 2026 market.
DSCR Loan FAQ
Can I get approved with DSCR below 1.0?
Yes—many 2026 programs allow 0.80–0.95 DSCR with pricing adjustments.
Do DSCR loans require income documentation?
No. DSCR loans qualify based on the rental income of the property.
Can I close in an LLC?
Yes—DSCR loans are designed for investors and commonly close in LLCs.
Do DSCR loans work for short-term rentals?
Yes—using AirDNA projections or income history.
How fast do DSCR loans close?
Typically 10–21 days, depending on appraisal timing.