DSCR & Permanent Financing
Financing based on property cash flow — with expanded leverage available through traditional underwriting.
- Use: Purchase, Refi, and Cash-Out on Rentals
- Property types: 1–10 Units, Condos, Mixed-Use (≥51% residential), Short-Term Rentals, and Rural Properties
- Eligibility: US Citizens, Permanent Residents, and Foreign Nationals
- Leverage: Leverage varies based on asset type, borrower qualifications, and desired cash-out.
Prepayment & Structure Matter
Prepayment influences the rate. Structure drives the leverage.
DSCR Explained
What a DSCR loan is
DSCR loans are underwritten primarily on property income with lighter documentation than traditional financing. Typical leverage is ~80% for purchase / non-cash-out refi and ~75% for cash-out, with exceptions based on the file.
Why Underwriting Can Feel Heavier Than Fix & Flip
Because many DSCR loans are sold into the secondary market, lenders follow tighter guidelines, which can require more verification than a Fix & Flip bridge.
Credit matters on DSCR
Credit can materially impact rate, points, and leverage. Lower credit often means worse pricing and/or reduced proceeds, even if the property cash flow is strong.
When Non-DSCR Permanent Financing May Be a Better Fit
If DSCR is tight or you want to stretch leverage, non-DSCR permanent options may fit better in some cases—often with more documentation and a different underwriting focus than pure DSCR.
Non-DSCR Permanent Financing
DSCR Isn’t the Only Path
DSCR relies primarily on asset performance. When additional documentation is available, traditional or hybrid underwriting may allow different pricing or leverage outcomes.
Want the Details
How DSCR and Leverage Determine Your Loan
DSCR qualification is based primarily on property cash flow.
DSCR = Net Operating Income ÷ Annual Debt Service
Most lenders require 1.10+ coverage, though select programs may allow near-break-even or negative DSCR.
Loan size is capped by whichever hits first:
LTV: Typically 70–80% for purchase or no-cash-out refinance, 65–75% for cash-out.
DSCR: If cash flow doesn’t support the required coverage, proceeds are reduced — even if LTV allows more.
Whichever constraint is tighter determines the final loan amount.
Structure, Prepayment, and Long-Term Economics
Interest-only structures reduce annual debt service, which can improve DSCR and preserve leverage, allowing investors to control more assets with less equity. Prepayment structure directly impacts pricing, with longer penalties typically offering lower rates. The right decision isn’t about headline rate — it’s about net present value over the projected hold period. Interest-only and structured prepayment can produce stronger long-term outcomes than focusing solely on amortization or flexibility. Contact us to run the numbers and determine the optimal structure.
Timeline and Underwriting
Standard DSCR transactions can close in ~14 days when documentation and appraisal move on schedule. DSCR underwriting typically requires an appraisal, credit review, rent analysis, and basic entity documentation.
Expanded leverage or traditional income-based underwriting programs may take up to 60 days, depending on complexity. These structures generally require additional documentation such as tax returns, bank statements, liquidity verification, and asset documentation.
What Clients Say
“They explained the DSCR math clearly and helped us present the file in a way that actually underwrote.”
Rental investor • Purchase + refi
“The process was organized—clear checklist, quick answers, and steady communication.”
Portfolio borrower • Multiple doors
DSCR Back-of-the-Napkin Calculator
Estimation only — many factors can affect the loan and final DSCR.
All DSCR calculations are performed on an annual basis.