Quick answer
Most DSCR lenders look for a ratio of 1.0 or higher (rent at least equal to principal, interest, taxes, insurance and HOA), a 20% to 25% down payment, several months of reserves, and an investment property. Ratios of 1.25 or more usually price best. Some programs allow ratios below 1.0 with a larger down payment.
The ratio
DSCR = monthly rent ÷ full monthly payment (principal, interest, taxes, insurance and any HOA dues).
Example: $3,200 rent ÷ $2,700 payment = 1.19. Run your own numbers in the DSCR calculator.
Requirements checklist
| Requirement | Typical range |
|---|---|
| DSCR | 1.0+ common; 1.25+ for best pricing; below 1.0 with some programs |
| Down payment | 20%–25% on a purchase |
| Credit | Varies; higher scores improve pricing and leverage |
| Reserves | Several months of payments in the bank |
| Property | Investment property: single-family, 2–4 units, some condos |
| Borrower | Individual or LLC, depending on program |
Typical ranges, not a quote. Terms vary by lender, property type and loan size.
How rent is measured
- Leased property: the current lease, often compared against market rent.
- Vacant or new purchase: the appraiser's market rent estimate.
- Short-term rentals: some programs accept booking history or third-party projections.
Three ways to improve your ratio
- Put more down. A smaller loan means a smaller payment and a higher ratio.
- Shop insurance and check taxes. Both are in the denominator.
- Consider an interest-only option where offered, which lowers the payment used in the ratio. It also means you are not paying down principal.
Already own rentals with equity? An investment property HELOC can fund the next down payment, and DSCR vs. HELOC walks through when each wins.
FAQ
What DSCR do most lenders require?
Many require 1.0 or higher. Ratios of 1.25 or more usually get the best pricing, and some programs allow below 1.0 with a larger down payment.
How much do you need down for a DSCR loan?
Typically 20% to 25% on a purchase.
Do DSCR loans check credit?
Yes. Credit affects pricing and how much you can borrow, even though personal income is not used.
Can I get a DSCR loan in an LLC?
Many programs allow LLC borrowers, usually with a personal guarantee.
Part of the self-employed and non-QM mortgage guide: bank statement, P&L, 1099, asset depletion, DSCR, WVOE, ITIN and foreign national loans.
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