Buy another rental with a DSCR loan
A DSCR loan qualifies you on the property’s rent, not your personal income. It fits when the income on your tax returns isn’t enough for a bank to approve another loan.
NMLS 2797128 5.0/5 from 21,774 Google reviews of Loan Factory
Does the rent cover the loan?
- Monthly housing cost (30 years)
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- Loan amount
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Illustration only. Not a quote or a commitment to lend.
How a DSCR loan differs from a standard loan
- Usually no tax returns or pay stubs
- Works for purchases and refinances (including cash-out)
- Short-term rentals (Airbnb) depending on the lender
- For rental properties only, not a home you live in
- The trade-off: rate and down payment are usually higher than for a home you live in
The downsides of a DSCR loan
A good fit when
- Your personal income on paper won’t support another loan, but the property can carry its own payment
- You already have several financed properties
- You want to hold the property in an LLC
Not yet when
- You qualify for a conventional investment loan, which usually costs less
- The rent barely covers the payment, with nothing left for repairs or vacant months
- You plan to sell within a few years: many DSCR loans carry a prepayment penalty
I run DSCR on rent after vacancy and repairs, not just the number on the lease. If the property only breaks even on paper, I’ll tell you before you make an offer.
What clients say about Loan Factory
I started a DSCR loan with another company. The night before closing when I asked for the ALTA, it came back well short of what had been discussed for TWO Months. No explanation, no calls, nothing. Just a this is all we can do. My title company recommended Chad at the Loan Factory. They were able to get my entire package done with my original terms within 45 days. Much better service! Very happy and will use them again.
Last month, we successfully closed two DSCR loans on our fourplex and duplex properties. Natalie, Luke, and the entire team worked incredibly hard to help bring these great deals to life. We truly appreciate all their effort and highly recommend the team!
Kiran helped me in refinancing my investment home. His advise is very helpful. In fact he did more than what he promised. He is open and no hidden agenda. He ensured that process went smoothly and quickly. I am a happy customer and happy to refer to friends.
Google reviews of Loan Factory, the company I work with: 21,774 reviews, 5.0 average.
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Common questions
What DSCR do I need to get approved?
Each lender sets its own minimum. Many want the rent to equal or exceed the monthly payment. Some accept less with other conditions.
Where does the rent figure come from if the home has no tenant yet?
From the appraiser’s market rent report. If the home is already rented, the current lease is used.
What if I already have several financed properties?
Standard loans limit how many financed properties you can have. DSCR lenders are usually more flexible, but each sets its own limit. Send me your list and I’ll look at the options.