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What Are DSCR Loans?

DSCR stands for Debt-Service Coverage Ratio. DSCR mortgage loans are a type of commercial real estate loan where the lender evaluates the property's ability to generate income in order to cover the debt payments. Instead of primarily relying on the borrower's credit score and personal income, the lender assesses the property's income potential and its ability to service the mortgage debt.

DSCR mortgage loans are often used for financing income-generating properties such as apartment buildings, office buildings, and retail centers. Lenders typically look for a DSCR of 1.25 or higher, meaning that the property's income is at least 1.25 times the amount of the proposed mortgage payment.

This type of loan is commonly used by real estate investors and businesses looking to purchase or refinance income-producing properties.

Documentation for DSCR Loans

Income Statements

Up-to-date property income statements and financial records are essential for loan approval.

Rent Roll

A detailed rent roll listing tenant information and lease terms is required for DSCR loan evaluation.

Property Appraisal

A professional appraisal report to determine the property's current market value is crucial for the loan process.

How DSCR Loans Work

  • DSCR is calculated by dividing the property’s annual net operating income by its annual debt payments.

  • Lenders prefer higher DSCRs, indicating that the property generates enough income to cover its debt payments comfortably.

  • Borrowers need to demonstrate a strong DSCR to secure favorable financing terms and rates.

Eligibility for DSCR Loans

  • Commercial properties, such as office buildings, retail centers, and apartment complexes, are eligible.

  • Higher occupancy rates and consistent rental income positively impact DSCR eligibility.

  • Newer, well-maintained properties are often preferred by lenders for DSCR loans.

Advantages of DSCR Loans


Flexible Terms

DSCR loans often come with flexible repayment terms and competitive interest rates.



Lenders primarily assess the property's income potential, allowing for creative financing solutions.


Higher Loan Amounts

Properties with strong DSCRs may qualify for larger loan amounts.

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Live Market Pricing

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Loan Process

Welcome to our comprehensive guide to the loan process. Whether you’re a first-time homebuyer or experienced investor, understanding the steps involved in securing a loan is crucial. We’re here to simplify this journey for you.