Investors
What are current DSCR loan rates and what ratio do lenders require?
By Steve Lockhart
The short answer
A DSCR loan underwrites the property rather than the borrower: the lender looks at the rent the property produces compared with the loan payment, which is the debt service coverage ratio, and underwrites on that number instead of your W-2s and tax returns.
Full answer
A DSCR loan underwrites the property rather than the borrower: the lender looks at the rent the property produces compared with the loan payment, which is the debt service coverage ratio, and underwrites on that number instead of your W-2s and tax returns. DSCR financing exists for investors whose income picture does not fit a conventional mortgage, and it is covered in more detail in the DSCR article. The mechanism is stable; the numbers around it are not.
Rates and required ratios are not fixed facts. They vary by lender, by market, by property type and condition, by loan size and down payment, and by the current cost of money, and they change over time with conditions in the lending market. A rate or ratio quoted in an article, including this one, is stale the moment market conditions move. The only current answer comes from lender quotes on your specific property, and the right comparison includes rate, points, fees, down payment, and term together, not the rate alone.
Whatever the current minimum ratio is, underwrite with a cushion above it, because a property that barely clears the ratio on paper has no room for a vacant month, a repair, or a soft year. I am not a lender and I do not quote current rates or ratios; I can help you structure the rent, expense, and financing assumptions you bring to lenders, and I can connect you with lenders who actually do DSCR loans. Start with the DSCR explainer, then get your own quotes.
A note from Steve: nothing on this page is investment, legal, or tax advice. Markets move, and every property is different. Run your own numbers on the specific deal, and talk to your CPA and attorney before you commit.
Go a little deeper
Frequently asked
Questions investors often follow up on
What is a debt service coverage ratio?
The DSCR compares the property's income to its loan payment: roughly, the rent available to cover the debt divided by the payment. A ratio above one means the property produces more income than the payment requires; a ratio below one means it does not. Lenders use it to judge whether the property can carry the loan on its own.
Why does the required DSCR vary between lenders?
Because each lender sets its own risk tolerance, pricing, and underwriting standards, and those standards shift with market conditions. The same property can clear one lender's ratio and fall short at another, which is why you compare written quotes instead of borrowing a single number from anywhere.
Can I get a DSCR loan with no personal tax returns?
Usually that is the point of the product: qualification is based on the property's income rather than your personal returns or W-2s. Lenders still verify ownership, insurance, and the property's income data, and documentation requirements vary, so ask the lender exactly what they need for your situation.
The Lockhart Method
The Lockhart Method
Your Home | My Strategy | Proven Results
My strategy: we underwrite the property to a cushion above the lender's minimum, then compare written quotes on total cost rather than the headline rate. DSCR financing should fit the deal and your goals, and we decide that from the property's real rent and expenses, not from a number that moved last week.
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