Overview
Real estate investors have access to mortgage products that don't exist for primary-residence buyers. DSCR loans qualify based on the property's rental income — no personal DTI calculation, no employment verification, no tax returns. Close in an LLC for asset protection. Most DSCR lenders require a ratio of 1.00-1.25 (property cash flow covers the housing payment), 20-25% down, 640+ credit, and 6+ months reserves.
Conventional investment-property loans through Fannie Mae and Freddie Mac are available for borrowers who can document personal income. Down payment requirements start at 15% for a single-unit investment property and go up to 25% for 2-4 unit. Rates are typically 0.5%-1% above primary-residence pricing. The 10-property financing cap is a hard limit for conventional — beyond that, DSCR is the only path.
The BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat) typically uses cash or hard-money for the purchase and rehab, then refinances into a DSCR loan at the improved value to pull capital back out. Cash-out refinance limits on investment properties are typically 75% LTV. Many investors recycle the same down-payment capital through 4-6 properties using this approach.
Recommended loan programs
Frequently asked questions
Why use a DSCR loan instead of conventional?+
DSCR loans qualify on the property's cash flow, not your personal income. This means no tax returns, no employment verification, no DTI calculation. They also allow LLC ownership and don't have the 10-property cap that limits conventional investors. The tradeoff is rates 1-2% higher than conventional and tighter underwriting on the property side.
Can I cash out to buy more rentals?+
Yes. Most DSCR programs allow cash-out refinance up to 75% LTV. This is the engine of the BRRRR strategy — buy with cash or hard money, force appreciation through renovation, then cash-out refi at improved value to recycle capital. Reserve and seasoning requirements vary by lender.
What DSCR ratio do I need to qualify?+
Most DSCR lenders require a minimum 1.00-1.25 ratio (property cash flow at least equal to the mortgage payment). Some specialty programs go as low as 0.75 with strong borrower credit and reserves, but pricing is higher. A 1.25+ ratio gets the best rates.
Can short-term rentals (Airbnb) qualify for DSCR?+
Many DSCR lenders accept short-term rental properties using projected income from market rent surveys or actual booking history. Programs vary — some require 12 months of operating history, others accept market projections for new STRs. Have your loan officer match you to a lender that handles your specific scenario.