You find a duplex in Riverside listed at $520,000. Comparable two-bedroom units in the area rent for $1,450 each, so the property brings in $2,900/month. Your estimated PITIA (principal, interest, taxes, insurance, and any HOA) at 25% down comes to $2,650/month. Divide rent by PITIA: $2,900 / $2,650 = 1.09 DSCR. That ratio qualifies you for a DSCR loan without a single tax return, W-2, or pay stub.
That's the whole concept. DSCR stands for Debt Service Coverage Ratio, and it measures whether a rental property's income covers its mortgage payment. The lender doesn't care what you earn at your job. They care what the property earns.
DSCR = Monthly Rent / Monthly PITIA
A ratio of 1.0 means the rent covers the payment exactly. Above 1.0, the property cash flows. Below 1.0, the investor covers the shortfall out of pocket. Most lenders accept a DSCR as low as 0.75, but the rate penalty below 1.0 is steep enough that the numbers rarely make sense unless you're betting heavily on appreciation.
DSCR Loan Requirements: What Actually Determines Your Deal
The no-income-docs pitch is what gets investors in the door. The requirements below are what get a specific deal to close. We walk through each one in more depth in our guide on how to qualify for a DSCR loan.
Credit Score
Credit matters more in DSCR lending than in conventional because the lender has no income to fall back on. Most programs set a floor at 660 FICO. But the floor is just the starting point.
| Credit Score | Rate Impact |
|---|---|
| 760+ | Best available pricing |
| 720-759 | +0.125% to 0.25% |
| 700-719 | +0.25% to 0.50% |
| 680-699 | +0.50% to 0.75% |
| 660-679 |