DSCR Loan Requirements: What Lenders Check and What They Skip

DSCR loan requirements center on four things: the property’s rent relative to its payment, your credit score, your down payment, and your cash reserves. Income documents are not on the list.

Here is what a typical DSCR lender asks for, what the ranges look like in 2026, and where the exceptions are. Requirements vary because DSCR loans are non-agency products with no shared rulebook, so confirm the details with each lender you compare.

Minimum DSCR

Most lenders require a ratio of at least 1.0, meaning rent covers the full PITIA payment. The best pricing starts at 1.25. Some lenders accept ratios down to 0.75 with a bigger down payment and higher rate, and a few offer no-ratio programs that do not look at rent at all.

The ratio is gross monthly rent divided by principal, interest, taxes, insurance and HOA dues. The DSCR formula guide works through the math and the good DSCR guide explains how each band is priced.

Credit score

Minimums run from 620 to 680 depending on the lender. Rates and maximum LTV step up at 700, 720 and 740. Below 680 expect a lower LTV cap, often 70%, and a meaningful rate adjustment.

Lenders pull a tri-merge report and use the middle score. On an LLC loan, they pull the guarantor’s credit. Recent mortgage lates, a bankruptcy within the last two to four years, or a foreclosure within the last three to seven years will disqualify at most lenders.

Down payment and LTV

Purchases: 20 to 25% down, so 75 to 80% LTV. The 80% tier usually needs a 1.25 ratio and a 720 or higher score.

Rate-and-term refinances: 75 to 80% LTV.

Cash-out refinances: 70 to 75% LTV, sometimes 65% on two to four unit properties or lower ratios.

A weak ratio pushes LTV down. If the rent only supports a 1.0 ratio at 75% LTV, some lenders will approve at that ratio with an adjustment. Others will require enough extra down to hit 1.15 or 1.25. The DSCR loan down payment guide covers how to figure the minimum.

Reserves

Three to six months of PITIA in liquid assets after closing is standard. Cash-out proceeds sometimes count toward reserves, sometimes not. Retirement accounts typically count at 60 to 70% of value. Lower ratios and lower scores increase the requirement, and some lenders want reserves on every other financed property as well.

Income and employment

None. No tax returns, W-2s, pay stubs, profit and loss statements or debt-to-income calculation. Some lenders ask you to state your employment on the application. Nobody verifies it.

You will sign a business-purpose affidavit confirming the property is an investment and you will not occupy it.

Property types

• Single-family homes, townhouses and planned unit developments.
• Two to four unit properties, usually at slightly lower LTV.
• Warrantable condos. Non-warrantable condos at some lenders with restrictions.
• Short-term rentals at many lenders, qualified on a 12-month income history or a third-party rent projection, sometimes with a haircut.
• Five to ten unit properties and mixed-use at a smaller set of lenders, often under a separate commercial DSCR program.

Rural properties, properties over 10 acres, manufactured homes and properties in poor condition are common exclusions.

Rent documentation

For a leased property: the lease, and often proof of the last one to three months of rent deposits. The lender compares the lease to the appraiser’s rent schedule and typically uses the lower figure.

For a vacant property or a purchase without a lease: the appraiser’s market rent from Fannie Mae Form 1007 for single family or Form 1025 for two to four units. Some lenders discount market rent on a vacant property by 5 to 10%.

For a short-term rental: 12 months of platform statements, or a projection from a data provider the lender accepts.

Borrower and entity

Individuals, LLCs, corporations and some trusts can borrow. Closing in an LLC is routine and does not change the pricing at most lenders. The members sign as personal guarantors.

US citizens, permanent residents and many non-permanent residents qualify. Foreign nationals qualify at a subset of lenders with lower LTV, typically 65 to 70%, and larger reserves.

First-time investors are accepted at many lenders. Some require that you own a primary residence. A few reserve certain LTV tiers for borrowers with rental history.

Loan amounts and terms

Minimum loan amounts run from $75,000 to $150,000 depending on the lender. Maximums of $2 million to $3 million are common, with higher jumbo tiers available.

Terms: 30-year fixed, 40-year fixed with a 10-year interest-only period, and 5, 7 or 10 year ARMs. Interest-only periods of five or ten years are widely offered.

Prepayment penalties

This is the requirement that surprises people. Because these are business-purpose loans, prepayment penalties are legal in most states and standard on DSCR loans. Typical structures:

• Step-down: 5-4-3-2-1, meaning 5% of the balance if you pay off in year one, 4% in year two, and so on.
• Flat: 3% for three years, or 5% for five years.
• Minimum interest: six months of interest on any prepayment over 20% of the balance.

Buying out the penalty costs roughly 0.25 to 1 point in rate or fee. A few states restrict or ban prepayment penalties on residential property regardless of purpose, and lenders adjust their programs accordingly.

If your plan involves selling or refinancing inside five years, price the penalty into the deal before you sign.

Appraisal and closing

A full appraisal with a rent schedule is required. Expect $500 to $900 depending on the property. Title, escrow and lender fees are similar to a conventional investment property loan. Origination fees of 1 to 2 points are common on DSCR loans and negotiable.

Closing usually takes three to five weeks. With no income review, the appraisal is the bottleneck.

Check the ratio before you apply

Everything else on this list is knowable in advance. The ratio is the one that depends on the property, and it is worth checking before you pay for an appraisal. The DSCR loan calculator shows the ratio, the maximum loan the rent supports, and how much rent or down payment you need to reach 1.25.