DSCR Loan Requirements
DSCR loans typically evaluate property cash flow rather than personal income documentation, but lenders still apply clear qualification criteria around credit, equity, reserves, and property performance. Here is exactly what to expect.
Credit Score Requirements
Credit score is the single most influential factor after the DSCR ratio itself. Tiers work as follows:
- 620–659: Limited eligibility; higher down payment (25%–30%) and rate premium required.
- 660–679: Standard eligibility; qualifies for most programs at competitive leverage.
- 680–719: Strong profile; access to higher LTV and broader program selection.
- 720+: Competitive rates available through participating lenders and maximum leverage may be available.
Lenders pull all three bureaus and use the middle score for individual borrowers, or the lower middle score when there are co-borrowers.
Down Payment and LTV Requirements
The required equity position varies by transaction type:
- Purchase — Single-family/2-unit: 20% down (80% max LTV) with 680+ credit.
- Purchase — 3–4 unit: 25% down (75% max LTV).
- Rate/term refinance: 75%–80% max LTV depending on credit.
- Cash-out refinance: 70%–75% max LTV; typically requires a 6-month seasoning period on title.
Reserve Requirements
DSCR lenders require documented liquid reserves to ensure you can sustain payments through vacancies or unexpected repairs.
- Standard programs: 3–6 months of the subject property's PITIA payment held in bank accounts, brokerage accounts, or eligible retirement funds.
- Multi-property portfolios: Some lenders require 2–3 months of reserves for each financed property in your portfolio, not just the subject property.
Gift funds are generally not accepted for reserves on investment property loans.
How Rental Income is Documented
The lender uses one of the following to establish the gross monthly rent figure for the DSCR calculation:
- Existing lease: The current signed lease agreement is the most straightforward documentation. Lenders typically use the lesser of the lease rent or market rent from the appraisal.
- Market rent appraisal (1007/1025): If the property is vacant or the lease is month-to-month, the appraiser completes a rental analysis that establishes market rent.
- Short-term rental history: For Airbnb/VRBO properties, lenders may accept AirDNA market data or a 12-month operating history from the current owner.