Program highlights
- DSCR options available
- Owner occupied, 2nd homes and non-owner occupied
- Interest only: 30 and 40 year IO
- 40-year fixed interest only
- Fix & flip
- Bridge financing
- ITIN DSCR options
- Jumbo financing for investment properties
What is a DSCR loan?
A DSCR loan is an investor mortgage that qualifies based on the rental income of the property instead of your personal income. DSCR stands for debt service coverage ratio: the property's rent divided by its monthly housing cost, including principal, interest, taxes, insurance, and any HOA dues.
How DSCR works
If a property rents for more than its monthly housing cost, the ratio is above 1.0 and the property pays for itself. Lenders set minimum ratios, and some programs allow ratios below 1.0 with stronger compensating factors like a larger down payment or more reserves. Rent is typically supported by an existing lease or a market rent analysis from the appraiser.
Because your tax returns and W-2s are not the basis for qualifying, DSCR loans are a strong fit for self-employed investors and people who already own several rentals. Typical factors that drive terms include:
- Credit score
- Down payment, since DSCR loans usually require more than owner-occupied loans
- Cash reserves
- The DSCR ratio itself
- Property type, such as a single-family home, 2 to 4 units, or a condo
Interest-only options with 30 and 40 year terms, plus a 40-year fixed interest-only option, can improve monthly cash flow in the early years. We also offer DSCR options for ITIN borrowers.
Fix and flip loans
Fix and flip financing is short-term money to buy a property that needs work, renovate it, and sell or refinance it. These loans are usually based on the property's purchase price, rehab budget, and projected after-repair value. Experience and a clear scope of work help. Many investors flip or stabilize a property, then refinance into a long-term DSCR loan once it is rented.
Bridge financing
A bridge loan is short-term financing that lets you use equity in a property you own to buy your next one before the first one sells. It is useful for investors moving fast on a deal, and for homeowners who do not want to make their purchase contingent on a sale. Terms are short, and the plan to pay it off needs to be clear from the start.
What you need to apply
- A lease or expected market rent for the property
- Asset statements for down payment and reserves
- A schedule of real estate you already own
- For fix and flip: purchase contract, rehab budget, and scope of work
- An LLC's documents, if you are buying in an entity
How we help in Austin
Central Texas has a large rental market, with strong demand around Austin, Round Rock, San Marcos, and the growing towns along the I-35 and SH-130 corridors. We help you run the DSCR math before you write an offer, so you know how rent, taxes, and insurance affect qualifying. Texas property taxes are a real factor in that ratio, and we build them in accurately. We finance investment properties in all 12 of our licensed states.
Additional terms and conditions apply. Not all loan types are compatible with this product. Subject to underwriting conditions. Not a promise to make a loan. All borrowers must qualify.
DSCR and Investor Loans: common questions
What does DSCR mean on a mortgage?
DSCR stands for debt service coverage ratio. It is the property's monthly rent divided by its monthly housing cost, including principal, interest, taxes, insurance, and HOA dues. A ratio above 1.0 means the rent covers the payment. Lenders use this ratio instead of your personal income to decide whether the investment property qualifies for financing.
Do I need to show personal income for a DSCR loan?
Typically, no. DSCR loans qualify on the property's rental income, so you generally do not provide tax returns, W-2s, or pay stubs. The lender still reviews your credit, assets for the down payment and reserves, and the property itself. That makes DSCR a strong option for self-employed investors and people who own several rentals.
Can I buy a property in an LLC?
In many cases, yes. DSCR and other investor programs often allow closing in the name of an LLC or other business entity, usually with a personal guarantee from the owners. You will need the entity's formation documents and operating agreement. Rules vary by program, so tell us up front if you plan to buy or refinance in an entity.
How does a fix and flip loan work?
A fix and flip loan is short-term financing to buy a property, cover part or all of the renovation, and then sell or refinance. Terms are typically based on the purchase price, rehab budget, and projected after-repair value. Rehab funds are often released in draws as work is completed. Many investors refinance into a DSCR loan after renting the property.
What is a bridge loan used for?
A bridge loan lets you use equity in a property you already own to buy your next one before the first one sells. Investors use it to move quickly on deals, and homeowners use it to avoid a sale contingency. It is short-term financing, so you need a clear plan to pay it off, usually through a sale or refinance.