A DSCR loan, or Debt Service Coverage Ratio loan, is a financing option tailored for real estate investors. Unlike conventional loans that heavily rely on a borrower's income and employment verification, DSCR loans focus on the property's income potential. This makes them a practical solution for self-employed individuals or those with complex financial profiles.
Lenders calculate the Debt Service Coverage Ratio by dividing the property's gross rental income by the total debt service (including principal, interest, taxes, insurance, and HOA dues). For instance, if your rental property brings in $3,000/month and your total monthly debt is $2,000, your DSCR would be 1.5. Most lenders prefer a DSCR of at least 1.20 to offer a loan.
This type of financing streamlines the underwriting process, focusing on asset performance rather than personal income. As a result, DSCR loans enable faster closings and more scalability for portfolio growth.
DSCR loans are one of the most powerful tools for turnkey and value-add investors building a portfolio of rental properties. If you are a BRRRR (Buy, Renovate, Rent, Refinance, Repeat) investors then you know how amazing this loan product is already!
The Swell team can assist and provide loan terms that meet your needs. We will need the property address, rental income, rent type (leased, not leased, short-term / vacation rental), taxes, insurance and HOA costs. Then you decide the structure including pre-payment penalty, interest only or amortizing, and fixed vs. variable rate.
Submit your online DSCR loan request here: