Mortgage Glossary
DSCR Loan
A non-QM investment-property loan that qualifies on the property’s rental income via DSCR — no borrower tax returns, W-2s, or DTI required.
What is a DSCR loan?
A DSCR loan is a Non-Qualified Mortgage written specifically for investment property acquisition or refinance. Instead of qualifying the borrower on personal income (DTI), the underwriter qualifies the loan on the property’s rental income relative to its housing expense — the Debt-Service Coverage Ratio (Monthly Rents ÷ PITIA).
The borrower’s tax returns are not requested. W-2s are not requested. Employment verification is not part of the file. The lender does verify FICO, reserves, vesting, and the property cash flow — but the “does the borrower make enough money” question is replaced by “does the property make enough money.” This is why DSCR loans are the standard financing tool for self-employed investors and anyone whose tax returns understate their real cash flow.
DSCR loans are investment-only — they cannot be used for a primary residence. They are commonly written as 30-year fixed, 5/6 / 7/6 / 10/6 ARMs, or 40-year terms with an initial interest-only period.
How DSCR loans apply at Total Quality Lending
Total Quality Lending’s DSCR program offers up to 80% LTV, FICO from 640, and loan amounts from $100K to $3.5M. Eligible property types include single-family, 2-4 unit, condos and condo-hotels, and rural properties up to 5 acres. Short-term rentals (Airbnb, VRBO) are eligible up to top-tier LTV on purchase. For 5-9 unit properties, use Multi-Unit DSCR; for foreign-national investors, use Foreign National DSCR.
FAQs
What's the difference between a DSCR loan and a conventional investment property loan?
A conventional investment-property loan qualifies on the borrower's personal income via DTI, requires 2 years of tax returns, and limits borrowers to roughly 10 financed properties under Fannie/Freddie rules. A DSCR loan qualifies on the property's rental income via the DSCR ratio, requires zero borrower income docs, and has no cap on the number of investment properties.
What's the minimum DSCR to qualify?
TQL's DSCR program offers max-LTV pricing at DSCR of at least 1.00. There is also a 'no-DSCR-required' tier with reduced LTV caps for properties where rents don't fully cover PITIA — useful for short-term rental properties where the projected rent may be conservative.
Can a first-time investor get a DSCR loan?
Yes. First-time investors are eligible for TQL DSCR with restrictions (typically lower LTV cap and stricter reserves). Prior landlord experience helps but is not required.
Get a quote from a real human
Talk to a loan officer who closes DSCR investment loans every day.