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Debt Service Coverage Ratio (DSCR) loans are mortgage loans designed specifically for real estate investors that qualify the borrower based on the income generated by the property, rather than personal income or debt-to-income (DTI) ratio. Unlike conventional loans that require W-2s, tax returns, or paystubs, DSCR lenders evaluate the property’s ability to produce cash flow. DSCR loans allow investors who may not qualify for a conventional mortgage to obtain financing and scale their portfolios rapidly. These loans offer no personal income verification requirements, the ability to close in an LLC for asset protection, and allow for unlimited portfolio growth as long as the properties cash flow.
A Debt Service Coverage Ratio (DSCR) loan is a type of mortgage for real estate investors that qualifies the borrower based on the income generated by the property rather than their personal income or debt-to-income (DTI) ratio.
DSCR is calculated by dividing the property’s Net Operating Income (NOI) or Gross Rental Income by the total debt service (Principal, Interest, Taxes, Insurance, and HOA). Formula: DSCR = Gross Rent / PITIA.
Most lenders look for a DSCR of 1.20 or higher, meaning the property generates 20% more income than the monthly debt. However, we have programs for ‘No-Ratio’ loans where the ratio can be below 1.0 for high-equity deals.
Yes. DSCR loans are perfect for residential 1-4 unit properties as well as 5-9 unit commercial multi-family and mixed-use properties.
Unlike conventional loans which often cap at 10 properties, DSCR loans generally have no limit on the number of properties in your portfolio, making them ideal for rapid scaling.
Charles Parham brings years of hands-on mortgage experience, honest advice, and a personal commitment to every client guiding you from the first call straight through to closing day.
Charles secures the most competitive mortgage rates available saving you money every month and over the full life of your loan.
Charles offers free, no obligation consultations to every client so you can explore your options without any pressure or upfront cost.
Charles monitors your loan long after closing keeping you informed about refinancing opportunities and market changes that could benefit your financial future.
Charles is always available to answer your questions providing dedicated, around the clock support throughout every stage of your mortgage journey.
