A DSCR loan (Debt-Service Coverage Ratio loan) is a real estate investment loan where the property's rental income — not the borrower's personal income — qualifies the loan. DSCR = Net Operating Income ÷ Total Debt Service. No W-2 or tax return required. Typical threshold: 1.0x–1.25x.
A DSCR loan is a non-QM (non-qualified mortgage) real estate investment loan where underwriting is based on the property's cash flow rather than the borrower's personal income. DSCR stands for Debt-Service Coverage Ratio: DSCR = Net Operating Income (NOI) ÷ Total Annual Debt Service. NOI is the property's gross rental income minus operating expenses (taxes, insurance, maintenance — but not debt service). If a property generates $30,000/year in NOI and the annual mortgage payment is $24,000, DSCR = 1.25x. A ratio above 1.0x means the property covers its own debt; below 1.0x means it does not.
Most DSCR lenders require a minimum DSCR of 1.0x–1.25x, with better pricing for ratios above 1.25x. Some lenders offer sub-1.0 DSCR products (called 'DSCR below 1.0' or 'no-ratio DSCR') for strong borrower profiles with compensating factors. Typical DSCR loan parameters: LTV up to 75%–80% for purchases, 70%–75% for cash-out refinances; minimum loan amounts $75,000–$150,000 (lender-dependent); property types — single-family rentals (SFR), 2–4 unit, small multifamily (5–10 units), short-term rentals (with lender approval); FICO minimums 620–680 depending on lender.
DSCR loans are designed for real estate investors who: (1) own multiple properties and have complex personal income that doesn't reflect true earning power; (2) are self-employed with significant write-offs that reduce taxable income below what a conventional lender would accept; (3) are scaling a rental portfolio and need a product that doesn't require W-2 income verification for each acquisition. DSCR loans are not for primary residence purchases — they are investment property financing only. The CFPB publishes guidance on investment property lending distinctions.
Conventional investment property loans (Fannie/Freddie) use personal income (DTI) as the primary qualifier — W-2s, tax returns, and a maximum of 10 financed properties. SBA 504 loans finance owner-occupied commercial real estate (not investment property). DSCR loans occupy a different category: non-QM, private/conventional (not government-guaranteed), investment property only, property-cash-flow underwriting. Rates on DSCR loans are typically 50–150 bps higher than conventional investment property loans for the same FICO and LTV — the premium reflects the non-QM structure and the absence of income documentation.
ClearValue Lending routes DSCR loan applications to a single matched lender. One application. If your rental property cash flows above 1.0x DSCR and you're looking for investment property financing without personal income verification, submit your application and get a single matched offer based on the property profile and your credit.