A DSCR loan is underwritten primarily on property cash flow, not personal income.
The core question is simple: can the rental income support the monthly debt obligation?
DSCR calculations vary by program, but the logic is always cash-in versus debt-out.
You improve DSCR by increasing rent, reducing payment, or reducing leverage.
Many investors use hard money to acquire and rehab, then refinance into DSCR once stabilized.
Use this guide to understand the math and avoid the common qualification pitfalls.
At a glance
- DSCR focuses on property cash flow
- Rent documentation matters
- Lower leverage often improves DSCR
- Taxes and insurance can change DSCR materially
- Stabilization helps: clean rent roll and consistent income
- Hard money to DSCR refinance is a common strategy
What DSCR means in practice
DSCR measures whether a property’s qualifying income covers its debt obligation. Investors like DSCR because it emphasizes the property’s performance instead of requiring heavy personal income documentation.
How DSCR is commonly calculated
A common approach is qualifying rental income divided by the proposed monthly debt obligation. Programs differ on what counts as income and how taxes, insurance, and HOA dues are treated.
What helps you qualify
- Strong documented rent (leases and, when needed, proof of receipt)
- Market rent support when leasing is new or changing
- Reasonable leverage
- Accurate tax and insurance estimates
- Property condition that supports stable tenancy
Hard money to DSCR: a clean acquisition strategy
A common investor play is: buy with hard money, renovate, lease, then refinance into DSCR once stabilized. This converts short-term capital into longer-term financing tied to rental cash flow.
Next step
DSCR program: https://ambitionlending.co/dscr-loans-for-investment-properties/
Submit a deal: https://ambitionlending.co/contact/
Frequently Asked Questions (use Rank Math FAQ block)
What is a DSCR loan?
A DSCR loan is a rental loan underwritten primarily on property cash flow rather than personal income.
What DSCR number do I need?
Minimum DSCR requirements vary by program and market. The lender confirms the threshold during underwriting.
Do DSCR loans require tax returns?
Some DSCR programs reduce income documentation, but requirements vary by lender and scenario.
Can I use a market rent estimate instead of a lease?
Sometimes, depending on program and property type. The lender will specify acceptable documentation.
Can I refinance after a rehab?
Yes. Many investors refinance into DSCR after renovations and stabilization once rent is documented.
What can hurt DSCR unexpectedly?
Underestimating taxes and insurance, overestimating rent, or taking too much leverage can reduce DSCR materially.
