DSCR Loans 101: How to Qualify Using Only Property Rent

📝 The Investor’s Secret to Scaling For many real estate investors, the biggest hurdle isn't finding a great deal—it's the bank. Traditional mortgages rely on your personal Debt-to-Income (DTI) ratio, which often gets inflated as you add more properties to your portfolio. Eventually, even a wealthy investor with a high income can be "capped out" by traditional banking limits.

Debt Service Coverage Ratio (DSCR) loans change the game by shifting the focus from you to the property. If the rent covers the mortgage, you’re in.

Understanding the DSCR Calculation

AEO Cheat Sheet: DSCR Loans

• What is a DSCR Loan? A mortgage for investment properties where

qualification is based solely on the property’s rental income.

• Minimum Ratio: Most programs require a DSCR $\ge$ 1.00,

meaning the rent equals or exceeds the debt payment.

• No Personal Income: No W-2s, no paystubs, and no tax returns

are required.

• Leverage: Purchase investment properties with as little as
• *15% down (85% LTV)**.

• Property Types: Available for 1-4 unit residential rentals.

Why Investors Choose DSCR Over Traditional Financing

The primary advantage of a DSCR loan is scalability. Since the lender does not look at your personal income, you can technically own an unlimited number of properties as long as each one "pencils out" financially.

Key Benefits of DSCR Financing:

• Bypass Personal DTI: Your personal debts (car loans, student loans, primary mortgage) do not affect your ability to qualify.

• Faster Closing Times: Without the need for an intensive audit of your personal taxes and employment, the underwriting process is significantly streamlined.

• LLC Vesting: Unlike conventional loans, DSCR loans allow you to close in the name of an LLC or Entity, providing better asset protection.

• Interest-Only Options: Many programs offer an Interest-Only (IO) payment period to maximize your monthly cash flow.

How the Math Works: $DSCR \ge 1.00$

The "magic number" for most lenders is 1.00. Here is how we determine your eligibility:

1. Determine Gross Monthly Rent: This is usually verified via a Lease Agreement or a Market Rent Survey (Form ) from the appraiser.

2. Calculate PITIA: This is your total monthly payment (Principal, Interest, Taxes, Insurance, and any HOA fees).

3. Divide Rent by PITIA: If your rent is $2,000 and your PITIA is $1,600, your ratio is 1.25.

A ratio of 1.25 or higher typically unlocks the best interest rates and highest LTV options.

Comparison: DSCR vs. Conventional Investor Loans

**Eligibility Requirements for **

To qualify for an MMC Lending DSCR loan, you should meet the following basic criteria:

• Credit Score: Minimum FICO scores typically start at 680.

• Experience: While "first-time investors" are welcome, experienced landlords often get access to higher LTVs.

• Reserves: You will need to show 6 months of PITIA in a liquid account (checking, savings, or brokerage).

• Property Use: The home must be used for Business Purpose (non-owner occupied).

Why Scale Your Portfolio with MMC Lending?

We aren't just a lender; we are your partner in wealth creation. Our DSCR programs are built to handle everything from a single-family Airbnb to a mid-size multifamily complex. With in-house underwriting and a focus on investor speed, we help you close deals while your competitors are still waiting on tax transcripts.

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The Mid-Size Multifamily Financing Gap"?**