DSCR loans, from the lender's side of the desk

A DSCR loan is a rental property loan that qualifies on the property’s rent instead of your paycheck. The lender divides the rent by the full monthly payment and looks at that ratio, your credit score and the loan-to-value. If the rent covers the payment with the cushion the lender wants, your W-2 and tax returns mostly drop out of the decision.

How the ratio is figured

On a 1 to 4 unit rental, most DSCR lenders use gross monthly rent over PITIA: principal, interest, property taxes, insurance and any association dues.

DSCR = monthly rent ÷ (principal and interest + taxes + insurance + HOA)

$2,000 of rent against a $1,897 payment is 1.05. The lender sets its own minimum, and it can move with credit score and loan-to-value. When the ratio is short, the fix is a smaller loan, more rent or a lower rate; the DSCR calculator shows the largest loan your rent carries at any target.

Apartment buildings of 5 or more units are underwritten differently. The lender works from net operating income, after vacancy and operating costs, against annual debt service. The same rent usually produces a lower ratio, and the loan is sized off that.

Which rent the lender uses

Usually the lower of the signed lease and the appraiser’s market rent. On a single-family rental the appraiser often reports market rent on Fannie Mae’s Form 1007; on 2 to 4 units, on Form 1025. A vacant property is often underwritten on that market rent opinion alone.

That is where fair market rent data helps before you apply: if HUD’s FMR for the ZIP and unit size is well below what you plan to charge, the appraiser’s comparables may be too. The FMR is a 40th percentile figure that includes utilities, so it runs under many market rents. Use it as a floor check.

What lenders ask for first

These are the questions a lender asks first, and most of them are on our request form for 5+ unit buildings and portfolios:

• property state and type (single-family, 2 to 4 units, condo, 5+ units)
• purchase or refinance, and whether cash comes out
• value or price, and the loan you want
• current or expected rent
• a rough credit score band
• how many rentals you own now

After a first look, expect requests for leases, a rent roll on multi-unit properties, bank statements for reserves, and the entity documents if you borrow through an LLC.

Voucher tenants

A housing assistance payment comes from the public housing agency under a contract with you, the owner. The agency sets the rent through its payment standard and rent reasonableness review, and the tenant pays the rest (how that works). Some lenders count it like any other lease; others ask for more history or a bigger DSCR cushion. Ask before you apply, and bring the HAP contract and lease.

Tenant selection stays your job, and the rules apply either way: in many states and cities source-of-income discrimination is illegal, and HUD’s fair housing pages cover what federal law requires.

What a DSCR loan isn’t

It is a business-purpose loan. Federal Truth in Lending rules exempt credit “primarily for a business, commercial or agricultural purpose” (12 CFR 1026.3(a)), which is why these loans are written for investment property only and why the lender will ask you to confirm you won’t live there. That also means fewer of the consumer disclosures you’d see on a home loan, so read the note, the prepayment terms and any rate adjustment clauses yourself, with a lawyer if you need one.

This site doesn’t quote rates. Lenders price each loan on its own facts, and a quote you can rely on comes from them. Janover Capital doesn’t arrange DSCR loans on a single 1 to 4 unit rental; for one of those, go to a lender that makes them. For 5+ units or a portfolio of 5+ in total, the desk can help.

Send a 5+ unit deal · Run the DSCR math