DSCR Loans: Qualify on Cash Flow, Not Paystubs

A Debt-Service Coverage Ratio (DSCR) loan is a non-QM mortgage underwritten on the cash flow of the subject property — not on the borrower's personal income. If the rent covers the mortgage, taxes, insurance, and HOA, you qualify. That's it.

For investors who hold property in an LLC, write off heavily on tax returns, or simply own too many doors for an agency lender to count, DSCR is the tool that lets you keep buying.

How the DSCR ratio works

The ratio is simple math: monthly rent divided by the monthly principal, interest, taxes, insurance, and HOA (PITIA).

• 1.00x — rent exactly covers the payment. Eligible at most lenders, but priced higher.
• 1.25x — the sweet spot. Best pricing, widest eligibility.
• Below 1.00x — "no-ratio" or "negative DSCR" programs exist, but expect lower LTVs and higher rates.

What you need to qualify

• Credit: 660+ minimum, 700+ for best pricing.
• LTV: Up to 80% on purchase, up to 75% on cash-out.
• Reserves: Typically 3–6 months PITIA in the bank.
• Property: 1–4 units, condo, or non-warrantable condo. Short-term rentals eligible with 12-month rental history.
• Entity: Close in your personal name or in an LLC — your call.

Where DSCR wins

DSCR is the go-to when:

• You're a full-time investor with no W-2 income.
• Your tax returns show losses after depreciation, but the cash flow is real.
• You already own 10+ financed properties — agency lenders cap out.
• You want to close in an LLC for liability and asset protection.
• You're financing a short-term rental and need 12-month projected income (Airbnb, Vrbo).

What it costs

Pricing on DSCR is roughly 0.75% – 1.25% above conventional at the same credit profile. The trade-off is real, but it's the price of a loan that doesn't ask about your personal income, employment, or W-2s.

At UTM we shop the entire DSCR market — Angel Oak, Deephaven, Verus, A&D, Acra, and others — to find the lowest rate for your scenario. One application, many quotes.