DSCR

DSCR stands for debt service coverage ratio. Instead of centering qualification on personal income documentation, this type of investment-property financing looks primarily at the relationship between the property's rental income and the housing expense it carries. Guidelines vary by investor, and credit, reserves and property standards still apply.

• Investors whose tax returns do not reflect the way their business actually performs.
• Self-employed borrowers who want qualification centered on the property.
• Investors adding properties where traditional debt-to-income limits become the constraint.
• Owners refinancing rental property to reposition equity, subject to program requirements.

• Qualification can focus on the property's performance rather than personal income documentation.
• It can support portfolio growth where conventional limits become restrictive.
• Documentation is often more straightforward for experienced investors.

• Pricing and terms generally differ from owner-occupied financing.
• Reserve, credit and property requirements apply and vary by investor.
• The numbers must work at the property level — a weak ratio limits options.

DSCR is a portfolio tool, not a shortcut. The right question is not only whether a property qualifies, but whether the structure supports what you want the portfolio to do over the next several purchases.

DSCR guidelines vary by investor and are subject to change. Credit, reserves, property type, lease documentation and other requirements apply. Not all applicants or properties will qualify.