DSCR Loans on the Cheap!

Secure funding for your next investment property using DSCR loans, without providing tax returns or personal income documents.

A Debt Service Coverage Ratio (DSCR) loan is a streamlined, no-income mortgage. Lenders design these loans specifically for real estate investors. Instead of verifying your W-2s or pay stubs, lenders qualify you based entirely on the property’s projected cash flow. Therefore, you can avoid the high rates of private hard money. You also skip the strict criteria of conventional banks. Ultimately, DSCR loans offer a fast, efficient path to growing your portfolio.

What Is the Debt Service Coverage Ratio (DSCR)?

The debt service coverage ratio measures a property’s annual gross rental income against its annual mortgage debt, including principal, interest, taxes, insurance, and HOA (if applicable). Lenders use DSCR to analyze how much of a loan can be supported by the income coming from the property. When calculating DSCR, lenders do not take into account expenses such as:

• Management
• Maintenance
• Utilities
• Vacancy rate
• Repairs

DSCR Formula Calculation

How to Calculate DSCR

Step 1: Determine Gross Income
To find your gross rental income, we take your annual rental income based on your lease agreement and the appraiser’s comparable rent schedule (form 1007) and use the lesser of the two. In some cases, with a 12-month history of short or long-term rental income, you can qualify off that history rather than market rent.

Step 2: Determine Annual Debt
Your annual debt for loan qualification equals the total annual principal, interest, taxes, insurance, and HOA (if applicable) payments.

Step 3: Calculate the Ratio
Divide your annual gross rental income by your annual debt.

Example of Debt Service Coverage Ratio Calculation

A real estate investor is looking at a property with a gross rental income of $50,000 and an annual debt of $40,000.

How to Improve Your DSCR

Improving your DSCR before applying can increase your chances of approval and the amount you qualify for:

• Increase rental income: Optimize occupancy rates, increase rent in line with market trends, or offer amenities to command higher rates.
• Refinance existing loans: Refinance at lower interest rates, longer repayment terms, or add an interest-only feature to reduce monthly debt obligations.
• Increase property value: Invest in strategic property upgrades to command higher rental rates.
• Manage expenses: Implement cost-saving measures. (While lenders don’t count expenses in the DSCR calculation, this improves your personal bottom-line cash flow).

What Are DSCR Loans?

A DSCR loan is a popular Non-QM (Non-Qualified Mortgage) alternative for real estate investors. It makes it easier to show rental income that might not appear on your taxes due to legitimate business deductions. Because it relies on cash flow rather than personal W-2s, investors who claim heavy write-offs won’t struggle to meet basic eligibility standards.

How Does a DSCR Loan Work?

Real estate investors are making up more and more of the U.S. real estate market. Because they write off expenses on their properties, some may not qualify for conventional loans. DSCR loans bypass traditional proof-of-income barriers. They are ideal for:

• Single Family Residences (SFR), including single-family homes, condos, and townhomes.
• Multifamily properties (2-10 Units).
• Rural properties (acreage limitations apply, and income must be supported by comparable area rents).

What Is a Good DSCR Ratio?

Many lenders require a 1.25 DSCR to qualify. However, Wholesale Mortgage Source allows investors to qualify with a DSCR of less than 0.75.

Keep in mind that lower ratios require stronger compensating factors. A ratio under 1.0 usually requires a 25-30% down payment, a 700+ credit score, and 6-12 months of reserves. You can potentially increase your ratio by choosing an interest-only loan or a 40-year term to maximize cash flow.

DSCR Loan Requirements

• Minimum credit score of 620: While our average borrower has a 732 score, we can work with scores as low as 620.
• Minimum loan amount of $50,000: We offer loan amounts ranging from $50,000 to $20,000,000.
• Appraisal: Required to determine current market value and fair market rent.
• Property type: Must be a non-owner-occupied, income-producing investment property.

Pros and Cons of DSCR Loans

“A DSCR loan is low doc. When you’re applying for a conventional loan, you’re going to be bombarded with conditions and requests for income documentation. A DSCR loan keeps the stress lighter on the client throughout the transaction.”

When Not to Use a DSCR Loan

• Purchasing a primary residence: DSCR loans are strictly for investment properties.
• Fix-and-flip projects: The property must be rent-ready. If it needs major rehab, a hard money or bridge loan is more appropriate.

Managing Prepayment Penalties

Prepayment penalties are fees charged if you sell or refinance the home before the agreed-upon term ends. Opting for a penalty usually secures a lower interest rate. Common structures include:

• 3-2-1 Structure: A 3% penalty in year one, 2% in year two, 1% in year three, and 0% thereafter.
• 5-4-3-2-1 Structure: Scales down over a 5-year period.
• 6 Months Interest: A penalty equal to 6 months of the interest portion of your payment.

Note: DSCR loans are available without pre-payment penalties for a slightly higher rate, or the penalty can be bought out.

How to Apply for a DSCR Loan

1. Fill out a loan application online or call our office.
2. We calculate your DSCR and fill out a rent schedule.
3. Lock in your interest rate as we proceed through underwriting.
4. Get approved without digging up your personal financial history.
5. Loan is funded!

DSCR Loans for Short-Term Rentals (Airbnb/VRBO)

Short-term rentals are highly lucrative, and DSCR loans are the perfect solution to finance them. Investors can also use cash-out refinances to pull equity for future expansions. To qualify for a short-term rental DSCR loan, you typically need:

• Minimum credit score of 680
• Minimum DSCR of 1.00
• Minimum down payment of 25% (if you have 1+ year of STR experience)
• Minimum down payment of 30% (if you have less than 1 year of experience)

Where We Lend: DSCR Investment Property Loans by State

Wholesale Mortgage Source originates business-purpose Debt Service Coverage Ratio (DSCR) mortgage loans for real estate investors across 36 states and jurisdictions. Qualify based entirely on rental cash flow—no tax returns, personal W-2s, or DTI calculations required.

Eligible States & Jurisdictions (36)

Not Available (15)

Alabama DSCR Loans

Financing for single-family rentals, multifamily units, and Gulf Coast vacation investments in Birmingham, Huntsville, and Mobile.

Alaska DSCR Loans

Cash-flow mortgage programs for single-family rentals, multifamily properties, and seasonal hospitality investments in Anchorage, Fairbanks, and Juneau.

Arkansas DSCR Loans

Cash-flow mortgage solutions for Little Rock, Fayetteville, and Bentonville buy-and-hold residential investment portfolios.

Colorado DSCR Loans

Short-term vacation rental (STR) and long-term rental financing in Denver, Colorado Springs, Boulder, and mountain resort towns.

Connecticut DSCR Loans

Rental property purchase and cash-out refinance loans tailored for Fairfield, Hartford, and New Haven County investors.

Delaware DSCR Loans

Asset-based mortgages for corporate entity/LLC borrowers investing in Wilmington, Newark, and Rehoboth Beach coastal rentals.

Florida DSCR Loans

Premier STR, Airbnb, condo-hotel, and long-term rental financing in Miami, Orlando, Tampa, Jacksonville, and the Panhandle.

Georgia DSCR Loans

Flexible cash-flow programs for residential real estate investments across Atlanta, Savannah, Augusta, and North Georgia cabins.

Hawaii DSCR Loans

Asset-based financing for high-yield vacation rentals, condo-tels, and residential income properties across Oahu, Maui, Kauai, and the Big Island.

Illinois DSCR Loans

Flexible debt-service solutions for Chicago multi-unit buildings, suburban rental portfolios, and turnkey rental properties downstate in Peoria and Rockford.

Indiana DSCR Loans

Investor loans tailored for high-cash-flow single-family homes and small multifamily assets in Indianapolis, Fort Wayne, and Southern Indiana.

Iowa DSCR Loans

Turnkey and portfolio rental mortgages for real estate investors expanding throughout Des Moines, Cedar Rapids, and Davenport.

Kentucky DSCR Loans

Local mortgage expertise for residential investment properties, Airbnb rentals, and multi-unit buildings across Louisville, Lexington, and Bowling Green.

Louisiana DSCR Loans

Commercial-style investor mortgages for residential properties in New Orleans, Baton Rouge, Lafayette, and Shreveport.

Maine DSCR Loans

Financing for seasonal vacation rentals, coastal properties, and long-term rental units in Portland, Bangor, and Bar Harbor.

Maryland DSCR Loans

Fast DSCR underwriting for Baltimore townhomes, DC-commuter suburbs, Annapolis properties, and Ocean City short-term rentals.

Massachusetts DSCR Loans

Asset-based non-QM loans for multi-family triple-deckers and single-family rental assets across Greater Boston, Worcester, and Cape Cod.

Mississippi DSCR Loans

Affordable single-family and small-multifamily rental financing across Jackson, Gulfport, Biloxi, and Oxford college rental properties.

Missouri DSCR Loans

Streamlined qualification for Kansas City turnkey rentals, St. Louis brick multi-units, and Lake of the Ozarks vacation retreats.

Montana DSCR Loans

Financing for destination short-term vacation rentals and long-term properties in Bozeman, Missoula, Whitefish, and Billings.

Nebraska DSCR Loans

Straightforward cash-flow financing for residential buy-and-hold properties, student housing, and small multifamily assets in Omaha, Lincoln, and Grand Island.

New Hampshire DSCR Loans

Portfolio and standalone investor mortgage programs across Manchester, Nashua, Portsmouth, and the Lakes Region.

New Mexico DSCR Loans

No-ratio and debt-coverage loan programs for Santa Fe short-term rentals, Albuquerque long-term portfolios, and Rio Grande multi-units.

Ohio DSCR Loans

Top-tier cash-flow loan structures for active real estate investors targeting cash-flowing assets in Columbus, Cleveland, and Cincinnati.

Oklahoma DSCR Loans

Low-cost entry investor financing for residential rental properties and student housing in Oklahoma City, Tulsa, and Norman.

Pennsylvania DSCR Loans

Flexible debt solutions for Philadelphia row homes, Pittsburgh multifamily properties, and Poconos short-term vacation rentals.

Rhode Island DSCR Loans

No-personal-income qualifying loans for Providence student and multi-family housing or coastal Newport vacation properties.

South Carolina DSCR Loans

Tailored financing for high-demand coastal rentals in Charleston, Myrtle Beach, and Hilton Head, plus upstate rentals in Greenville.

Tennessee DSCR Loans

Specialized DSCR programs for Nashville urban rentals, Memphis turnkey investment properties, and Smoky Mountain vacation cabins.

Texas DSCR Loans

High-volume investor loans across Dallas-Fort Worth, Houston, Austin, and San Antonio for single-family rentals and 2-10 unit complexes.

Virginia DSCR Loans

Comprehensive investor loan programs across Northern Virginia (NOVA), Richmond, Virginia Beach, and Norfolk military rental submarkets.

Washington DSCR Loans

Non-QM investment loans for single-family rentals, townhouses, and multifamily dwellings in Seattle, Tacoma, Spokane, and Vancouver.

Washington D.C. DSCR Loans

Streamlined cash-flow financing for multi-unit rowhomes, luxury condo investments, and long-term rental properties throughout the District.

West Virginia DSCR Loans

Affordable cash-flow financing for rental assets and vacation cabins throughout Charleston, Morgantown, and the Eastern Panhandle.

Wisconsin DSCR Loans

Streamlined rental property mortgages for multi-family duplexes and SFR investments in Milwaukee, Madison, and Green Bay.

Wyoming DSCR Loans

Financing for high-value vacation rental homes in Jackson Hole as well as cash-flowing residential rentals in Cheyenne and Casper.