How much down payment do I need for a DSCR loan?

Plan on 20 to 25 percent down for most DSCR loans. Stronger credit and a higher DSCR can move you toward the lower end of that range.

How much down payment do I need for a DSCR loan?

Plan on 20 to 25 percent down for most DSCR loans. Stronger credit and a higher DSCR can move you toward the lower end of that range.

DSCR Loans | Investment Property Financing Nationwide | Pillar Mortgage Group

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Investment Property Financing, Nationwide

DSCR loans: qualify on rental income, not your paycheck.

Q: Do DSCR loans work for short-term rentals?

They can. Many DSCR lenders will use short-term rental income, though documentation requirements are stricter than for long-term rentals.

A DSCR loan lets real estate investors qualify on the rent a property brings in, with no tax returns, no W-2s, and no income verification. If the numbers work, you can close, even in an LLC. Available to investors nationwide.

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What is a DSCR loan?

A DSCR (Debt Service Coverage Ratio) loan is an investment property mortgage that qualifies you based on the rental income the property generates, not your personal income. Instead of tax returns and pay stubs, the lender looks at one question: does the rent cover the mortgage payment?

Because DSCR loans are business-purpose investment loans, we can finance them for investors across the country. For self-employed investors, portfolio builders, and anyone whose tax returns do not tell the full story, this is often the difference between getting the deal done and getting declined. It is also one of the few programs that lets you close in the name of an LLC.

No tax returns

Qualify on rental income only

1.0+ DSCR

Rent covers the payment

20 to 25% down

Typical down payment

Nationwide

Investors across the U.S.

How DSCR is calculated

DSCR is a simple ratio: the property's monthly rent divided by its monthly payment (principal, interest, taxes, insurance, and any HOA).

DSCR = Monthly Rent ÷ Monthly PITIA

Example: a rental brings in $2,600 a month and the full payment is $2,200. DSCR = 2,600 ÷ 2,200 = 1.18. The rent covers the payment with room to spare, so the property qualifies on its own.

A ratio of 1.0 means rent exactly covers the payment. Above 1.0 is cash-flow positive on paper and usually prices better. Some programs will go below 1.0 with a larger down payment or reserves.

DSCR loan requirements

DSCR of 1.0 or higher for the best terms; lower ratios possible with more down or reserves.
20 to 25 percent down for most purchases; refinances follow similar equity requirements.
Credit score around 660+, with better pricing as the score rises.
Cash reserves of roughly 3 to 6 months of payments, depending on the program.
Property types: single-family rentals, condos, 2 to 4 units, and many short-term rentals.
No personal income documentation, so no tax returns, W-2s, or employment verification.

Why investors use DSCR loans

DSCR financing is how a large share of today's rental purchases get funded. Investors use these loans to move quickly, keep their personal tax picture out of the file, and scale a portfolio inside an LLC without the ceiling that conventional financing puts on the number of properties you can own. Whether you are buying your first rental or adding your tenth, the property's own cash flow does the qualifying.

Why work with Pillar Mortgage Group

A broker, not a single bank.

We shop multiple wholesale DSCR lenders to fit your deal, instead of forcing it into one bank's box.

Built for complex scenarios.

Investors, self-employed borrowers, and non-traditional income are our specialty, not an exception.

Communication first.

You will always know where your loan stands, what comes next, and exactly what numbers to expect.

Nationwide reach, personal service.

A Scottsdale-based brokerage financing investors across the country.

DSCR loan FAQ

What DSCR do I need to qualify?

Most lenders look for a DSCR of 1.0 or higher, meaning the rent covers the full payment. Some programs allow ratios below 1.0 with a larger down payment or higher reserves. Above 1.25 usually earns the best pricing.

How much down payment do I need?

Plan on 20 to 25 percent down for most DSCR loans. Stronger credit and a higher DSCR move you toward the lower end of that range.

Can I close in an LLC?

Yes. DSCR loans are one of the few mortgage programs that let you close in the name of an LLC, which is why portfolio investors use them.

Are DSCR loans available nationwide?

Yes. DSCR loans are business-purpose investment loans, so we can finance them for investors across the country, not just in Arizona.

Do DSCR loans work for short-term rentals?

Often, yes. Many DSCR lenders will use short-term rental income, though the documentation is stricter than for long-term rentals.

Run Your Numbers

Run your numbers with us.

Send us the property and the expected rent. We will calculate the DSCR, tell you straight whether it qualifies, and lay out the down payment and terms before you make an offer.

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Pillar Mortgage Group, LLC is an Equal Housing Lender, doing business in accordance with the Fair Housing Act and Equal Credit Opportunity Act. DSCR loans are business-purpose loans for non-owner-occupied investment properties.
Company NMLS# 2700076 | Arizona License MB-2009671 | View NMLS Consumer Access