No Income Verification

These loans don’t require tax returns, W-2s, or pay stubs. Instead, lenders look at the rental income the property generates—or is expected to generate—compared to the monthly mortgage payment. This ratio is called the Debt Service Coverage Ratio (DSCR).

DSCR Ratios

The DSCR is calculated by dividing the property’s gross rental income by its total monthly debt (principal, interest, taxes, insurance, and HOA if applicable).

 

A DSCR of 1.0 means the property breaks even.


Above 1.0 = Positive cash flow (preferred).


Below 1.0 = Negative cash flow (some lenders still allow this, but with tighter terms).

Loan Size

There are no hard limits on DSCR loan sizes, but higher loan amounts may come with stricter underwriting or higher interest rates. Many lenders cap loan-to-value (LTV) at 75–80%.

Credit Score & DTI

A credit score of 660 or higher is typically required. Lenders also look for strong reserves—often 3–12 months of mortgage payments—especially on larger portfolios.

Conventional Loans vs. DSCR Loans

Conventional loans are designed for primary residences, second homes, or investment properties—and they rely on the borrower’s personal income, employment, credit history, and debt-to-income (DTI) ratio to determine eligibility. DSCR loans, on the other hand, are specifically created for real estate investors and focus on the income potential of the property instead of the borrower’s personal finances.

 
Income Verification


With a conventional loan, you'll need to provide tax returns, pay stubs, W-2s, and other documentation to prove your income. Lenders evaluate your DTI to ensure you can repay the loan.

With a DSCR loan, there's no income verification. Instead, lenders assess whether the rental income from the property is enough to cover the mortgage payments. This is done using the Debt Service Coverage Ratio (DSCR). Most lenders require a DSCR of at least 1.0 (break-even), though some allow lower ratios with higher down payments or reserves.

 

Down Payment


Conventional loans may allow for as little as 3% down (for owner-occupied properties), though investment properties typically require 15–20% down.

DSCR loans usually require 20–25% down, depending on your credit score, DSCR ratio, and property type.

 
Credit Requirements


Conventional loans require a minimum credit score of 620, but better rates come with scores of 740+. Lenders also review your full financial picture.

DSCR lenders typically look for a credit score of 660+, but they’re more focused on the property’s income performance. Borrowers with lower scores may still qualify with stronger assets or higher DSCR.

 
Property Use


Conventional loans can be used for primary, secondary, and investment properties.

DSCR loans are only for investment properties—either long-term rentals or short-term vacation rentals. Owner-occupied homes do not qualify.

 
Who Should Use Which?


Use a conventional loan if you’re buying a home to live in or if your income and credit profile are strong.

Use a DSCR loan if you’re an investor looking to scale your rental portfolio without using your personal income to qualify.