DSCR Loans & 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, but not exclusively on property income with lighter documentation than traditional financing. Typical leverage is ~80% for purchase / non-cash-out refi and ~75% for cash-out.
DSCR Underwriting
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.
For larger multifamily, commercial rental, or special-use properties, see our Commercial Bridge Loans & Permanent Financing options.
Want the Details?
How Is DSCR Calculated?
DSCR = Net Operating Income ÷ Annual Debt Service. Most lenders require 1.10+ coverage, though some programs allow less. Loan size is capped by the tighter of LTV and DSCR: typically 70–80% LTV for purchase or no-cash-out refinance and 65–75% for cash-out, while weak cash flow can reduce proceeds further. Because appraised value sets the LTV side of the equation, valuation can make or break a refinance. Read An Appraisal Worth a Million Dollars.
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.
DSCR Loan Requirements
DSCR underwriting typically requires an appraisal, credit review, rent analysis, and basic entity documentation. Standard transactions can close in ~14 days when documentation and appraisal move on schedule.
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.