What Is a DSCR Loan?

DSCR Loan Meaning

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DSCR Loan Definition

DSCR (Debt Service Coverage Ratio) loans are designed for investment properties and qualify based on the property's rental income rather than personal income. If the rental income covers or exceeds the mortgage payment, typically indicated by a DSCR of 1.0 or higher, the property can cover its own debt, making the borrower eligible.

This loan type is ideal for real estate investors seeking to expand their portfolios without traditional income documentation. Lenders calculate DSCR by dividing monthly rent by the mortgage payment. Investors interested in scaling their investments may find DSCR loans a suitable option.

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DSCR Loan Definition Author

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Kristina Morales

Real Estate Contributor

Kristina Morales is the Real Estate Contributor at Loanfully, an online educational resource for borrowers and industry professionals. Kristina is both a licensed mortgage loan originator and real estate agent in the State of Ohio. Inspired by her years of working with buyers and sellers and seeing a need for more consumer education, Kristina created loanfully.com. In addition to real estate sales and mortgage lending, Kristina had an extensive corporate career in banking, treasury and corporate finance. She ended her corporate career as an Assistant Treasurer at a publicly traded oil & gas company in Houston, TX. Kristina obtained her MBA from the Weatherhead School of Management at Case Western Reserve University and her B.A in Business Management from Ursuline College.

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