What Is a DSCR Loan?

[charlie]

I keep hearing about DSCR Loans being popular among real estate investors, but I’m not entirely sure how they function. From what I understand, a DSCR Loan is based on the property’s Debt Service Coverage Ratio instead of personal income — but how exactly does that work in practice?

 

[Emly]

A DSCR loan is a real estate loan that’s approved based on a property’s Debt Service Coverage Ratio (DSCR) — a measure of how well the rental income can cover the loan payments. Instead of checking your personal income, lenders look at whether the property generates enough cash flow, making it popular for real estate investors.

 

[Lucas]

A DSCR loan is a real estate loan approved based on your Debt Service Coverage Ratio, which measures how well a property’s rental income can cover its loan payments. It’s commonly used for investment properties and doesn’t rely heavily on personal income or tax returns.