What Is a DSCR Loan?

DSCR = Gross Monthly Rent ÷ Monthly Loan Payment

A DSCR Loan (short for Debt-Service Coverage Ratio Loan) also known as a Buy & Hold Loan is a type of real estate financing used by investors to purchase or refinance rental properties based on the property’s cash flow, not the borrower’s personal income. This loan is approved based on whether the rental income can cover the debt not your job, W-2s, or tax returns.

  • Purchasing or refinancing a long-term rental

  • Refinancing a fix & flip into a rental

  • Building a passive income portfolio

Common Use Cases:

  • No tax returns or employment checks

  • Great for self-employed or investors with many properties

  • Can finance multiple properties at once

  • Helps turn flips into rentals without delay

DSCR Loan Benefits:

  • Monthly Rent: $2,000

  • Monthly Payment (PITI): $1,600

  • DSCR = 2000 ÷ 1600 = 1.25

Example of DSCR:

In this case, the deal would qualify with a DSCR of 1.25.