Blog / Investing
What is a DSCR loan for rental property?
Quick answer. A DSCR loan is an investor mortgage that qualifies mainly on the property's income instead of your personal income. DSCR means debt service coverage ratio: the rent divided by the monthly payment including taxes, insurance and dues.
By Michael O'Neal, Broker and REALTOR®, Keller Williams Realty Northeast
Published October 11, 2026
How is the ratio calculated?
Divide the monthly rent by the monthly payment of principal, interest, taxes, insurance and any HOA dues. A ratio above 1.0 means the rent covers the payment.
Who uses DSCR loans?
Investors who are self-employed, who own several properties, or who want to close in the name of an LLC often use them.
What are the trade-offs?
Expect a larger down payment and a higher rate than an owner-occupied loan, and often a prepayment penalty. Terms vary by lender, so compare more than one.
What rent does the lender use?
Usually the lower of the actual lease and the appraiser's market rent estimate. That is why accurate rent comparables matter before you make an offer.
How do I know if a property will qualify?
I can pull rent comparables and estimate taxes and insurance so you and your lender can run the ratio before you write the offer. Your lender sets the actual terms.
Looking at an investment property? Call me and we will run the numbers.
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