DSCR loan requirements, in plain English

The list that surprises people: no tax returns, no W-2s, no pay stubs, no employment verification, and no debt-to-income calculation. A DSCR loan qualifies the property, not your paycheck — the question isn't "what do you earn," it's "does the rent cover the payment." That's why write-off-heavy self-employed investors, retirees, and full-time landlords — people banks fumble — are the core DSCR customer.

Program floors cluster at 620–640, several go to 600, and no-score options exist at conservative terms. But the floor isn't the story — credit buys terms. The difference between a 660 and a 740 shows up as down payment, rate, and which programs open. When multiple borrowers apply, most programs use the lowest middle score among them — plan around your weakest score, not your best.

20–25% down is the working range on purchases. What moves it: your ratio (a 1.25+ property earns more leverage than a 0.95), your credit, property type (2–4 units and short-term rentals often price a notch tighter), and experience — first-time investors are commonly capped near 70–75% LTV. On refinances, maximums typically run 75–80% LTV for rate-and-term and a touch lower for cash-out.

1.00 is the standard line— the rent fully covers the payment. But it's a line, not a wall: programs publish sub-1.0 tiers at 0.80 and 0.75 (usually wanting stronger credit or more down), and No-Ratio programs skip the minimum entirely for deals that make sense on other strengths. Run your number on our DSCR calculator first — then let the Analysis match it to real programs.

Lenders want to see months of the full payment in the bank after closing — commonly 3 months on loans under about $1M, stepping to 6, 9, or 12 as the loan grows. First-timers often need 12. Two quirks worth knowing: on many programs cash-out proceeds can count as the reserves, and some waive reserves on lower-LTV rate-and-term refinances. This line item kills more deals than credit does — budget for it on day one.

Closing in an LLC is standard practice on DSCR loans — expect a personal guarantee from the members and a cap on how many owners the entity has. Citizens, permanent and non-permanent residents qualify broadly; a meaningful subset of programs also serves foreign nationals and ITIN borrowers. First-time investors: some programs pass, others price the risk with a higher credit floor and lower LTV.

Investment DSCR loans typically carry a 1-to-5-year declining prepayment penalty, and most programs let you buy it down (or out) through pricing. State law changes this materially — several states restrict prepay penalties on these loans — so the property's state is part of the answer. If you plan to refinance or sell inside three years, say so up front; it changes which structure is actually cheapest.