DSCR (Debt Service Coverage Ratio) loans are a type of real estate investment loan where approval is based on the income generated by the property rather than the borrower’s personal income. The DSCR is calculated by dividing the property’s net operating income by its debt obligations, and most lenders look for a DSCR of 1.0 or higher—meaning the property generates enough income to cover its loan payments. This structure is ideal for investors who own multiple properties or prefer not to document traditional income.

These loans are especially popular in the short-term and long-term rental markets because they prioritize property performance over personal financials. DSCR loans often have simpler documentation requirements and quicker closing times compared to conventional investment loans. While they may come with higher interest rates or down payment requirements, they offer a flexible solution for growing a real estate portfolio without the hurdles of full-income verification.