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 target keyword here is "requirements," and for good reason. The absence of income documentation is what gets investors interested in DSCR loans. The requirements below are what determine whether a specific deal actually closes.
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 | +0.75% to 1.25% |