💰📊 DSCR Loans Explained: Why They’re the Go-To for Property Investors 🏠🧠

🧾🏢 DSCR Loans 101: What They Are and Why Real Estate Investors Love Them 💼📈

June 19, 2025•2 min read

🧾🏢 DSCR Loans 101: What They Are and Why Real Estate Investors Love Them 💼📈

💰📊 DSCR Loans Explained: Why They’re the Go-To for Property Investors 🏠🧠

🧾🏢 DSCR Loans 101: What They Are and Why Investors Love Them

When it comes to scaling your real estate portfolio, few loan options are as powerful—and misunderstood—as the DSCR loan. If you’re an investor looking to qualify based on your property's income instead of your personal income, this might be the perfect tool for your next deal.

What is a DSCR Loan?

DSCR stands for Debt Service Coverage Ratio. This type of loan measures a property's ability to cover its own debt. Instead of relying on your W-2s, tax returns, or pay stubs, lenders focus on the income your investment property generates. That makes DSCR loans ideal for self-employed investors, gig workers, and anyone scaling their rental portfolio.

How Does DSCR Work?

Lenders use the formula:
DSCR = Net Operating Income / Annual Debt Service
For example, if your property earns $1,500/month in rent and your mortgage (including taxes and insurance) is $1,250/month, your DSCR would be 1.2. Most lenders look for a DSCR of 1.0 to 1.25.

Benefits for Real Estate Investors

· ✅ No personal income verification

· ✅ Streamlined underwriting process

· ✅ Great for portfolio expansion

· ✅ Works for short-term and long-term rentals

· ✅ Flexible LLC or personal ownership structures

Common Requirements

· Minimum DSCR of 1.0 (some go lower with higher rates)

· 20–25% down payment

· Property must be income-producing

· Decent credit score (660+ preferred)

Who Should Use a DSCR Loan?

This loan is perfect for:

· Buy-and-hold investors

· BRRRR strategy users

· Airbnb/short-term rental investors

· Self-employed landlords with multiple properties

📌 Pro Tip: Some lenders allow DSCR as low as 0.75 if you have strong reserves or put more money down. This flexibility can help you scoop up undervalued properties before they cash flow fully!

💬 Want to know if a DSCR loan is right for your next project? Let’s connect: https://billrapponline.com

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Bill Rapp - Commercial & Residential Mortgage Broker

Whether you're a first-time homebuyer, a seasoned investor, or a business owner with ambitious plans, securing the right financing is crucial. At Medallion Funds, we take the guesswork out of mortgages, offering a comprehensive suite of residential and commercial loan options to fit your unique needs. Looking for Your Dream Home? We understand the excitement and challenges of navigating the residential real estate market. Our experienced mortgage brokers will guide you through every step, from pre-qualification to closing. We offer a variety of loan programs to suit your financial situation, including: • Fixed-rate mortgages: Offering stability with predictable monthly payments. • Adjustable-rate mortgages (ARMs): Providing competitive rates for a set period. • FHA loans: Making homeownership accessible with lower down payments. • VA loans: Rewarding veterans with attractive rates and flexible terms. Investing in Your Business Future? Growth often requires capital, and we can help you unlock the potential of your commercial property. Our brokers specialize in a wide range of commercial loan options, including: • Purchase loans: Financing the acquisition of new buildings or land. • Construction loans: Facilitating the development of your project. • Refinance loans: Restructuring your existing mortgage for better terms. • SBA loans: Providing access to government-backed financing for qualified businesses. The Medallion Funds Difference: We go beyond simply finding a loan. We take the time to understand your goals and develop a personalized strategy. Here's what sets us apart: • Expertise: Our brokers have a deep understanding of both residential and commercial lending. • Competitive Rates: We leverage our strong lender relationships to secure the best possible terms. • Streamlined Process: We handle the paperwork, keeping you informed every step of the way. • Exceptional Service: We're committed to providing you with a positive and stress-free experience. Ready to Take the First Step? Contact Medallion Funds today for a free consultation. Let's discuss your financing needs and help you achieve your dreams!

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