Qualify the property, not your tax returns.
DSCR loans let the rental income carry the deal, so your personal tax returns stay out of it. For investors building a portfolio, that is often the difference between the next property and a hard stop.
How a DSCR is actually calculated.
Lenders compare what the property brings in against what it costs to carry. That single ratio drives the decision.
A ratio of 1.0 means rent covers the payment exactly. Above 1.0 means it covers it with room to spare. Below 1.0 does not automatically kill the deal, it just changes which lenders will look at it.
Debt service coverage ratio
The payment side generally includes principal, interest, taxes, insurance, and any HOA dues.
What investors use this for.
Every lender treats these differently, which is exactly why running them through a broker matters.
Closing in an LLC
Most DSCR lenders allow title in an LLC, which conventional financing typically does not. A personal guarantee is usually still required.
Short-term rentals
Many lenders will finance Airbnb style properties, but they value the income differently. Market rent, documented history, and AirDNA data are all used.
Sub-1.0 DSCR
Some lenders go below 1.0 in exchange for more down payment or reserves. Appetite varies a lot, so it is worth shopping.
Prepayment structures
Commonly one, three, or five year step-downs. Often buyable. The right choice depends entirely on your hold period.
Bank statement loans
When you want a primary or second home and your returns understate your income, non-QM bank statement programs are the usual path.
Hard money bridge
When a purchase needs to close fast, short term asset based financing can bridge you to permanent financing later.
What investors ask us most.
What is a DSCR loan and how does it work?
A DSCR loan qualifies an investment property on the income the property produces rather than on your personal income. DSCR stands for debt service coverage ratio, which compares the property’s rental income to its total loan payment, typically including principal, interest, taxes, insurance, and any HOA dues. A ratio of 1.0 means the rent covers the payment exactly. Because qualification leans on the property, DSCR loans generally do not require tax returns, W-2s, or pay stubs, which is why investors and self employed borrowers use them. Specific ratio requirements, reserves, and down payment vary by lender and by property type.
Can I close a DSCR loan in an LLC?
Usually yes, and this is one of the main reasons investors choose DSCR financing. Most DSCR lenders allow title to be held in an LLC or other entity, which conventional financing typically does not. You will generally still sign a personal guarantee, and the lender will want the entity’s formation documents and operating agreement. Requirements differ between lenders, so if entity vesting matters to your structure, it is worth confirming before you are under contract rather than after.
Do short-term rentals and Airbnb properties qualify for DSCR loans?
Many DSCR lenders will finance short-term rentals, but they evaluate the income differently than a long-term rental. Some use market rent from an appraisal, some use documented short-term rental history, and some use third-party data such as AirDNA. Which method a lender uses can meaningfully change whether a property qualifies, so a short-term rental that fails with one lender may work with another. Local regulations on short-term rentals also matter, since some California cities restrict them.
What if the property’s DSCR is below 1.0?
A ratio below 1.0 means the rent does not fully cover the payment, but it does not automatically end the deal. Some lenders offer sub-1.0 DSCR programs, generally in exchange for a larger down payment, higher reserves, or pricing adjustments. Whether it makes sense depends on your plans for the property and how the numbers work over your hold period. This is a case where comparing multiple lenders matters, because appetite for sub-1.0 ratios varies widely.
How do prepayment penalties work on DSCR loans?
Most DSCR loans carry a prepayment penalty, commonly structured over one, three, or five years, that applies if you sell or refinance within that window. The penalty is usually a percentage of the loan balance that steps down over time. In many cases you can buy the penalty down or eliminate it in exchange for different pricing. The right choice depends on your exit plan. If you intend to sell or refinance in two years, a five-year penalty can cost far more than the pricing you saved.
Benson Pang
Benson handles most of NestMade’s investor business. He came out of civil engineering, which shows up in how he structures a deal: he will look at your hold period and your exit before he talks about rate, because on investment property the structure usually costs more than the pricing does.
Read Benson’s story
Bring us the scenario.
Send the property, the rent, and your timeline. We will tell you which lenders will look at it and what the structure should be, including whether the deal is worth doing at all.