DSCR Loans for Rental Property Investors

A DSCR (Debt Service Coverage Ratio) loan is an investment property mortgage that qualifies you based on the rental property’s cash flow, not your personal income. The lender evaluates whether the property’s rental income covers the monthly debt payment, including principal, interest, taxes, insurance, and association dues (PITIA). No W-2s, no tax returns, no employment verification required. DSCR loans are built for real estate investors who want to scale without the documentation headaches of conventional lending.

DSCR = Gross Monthly Rental Income ÷ PITIA. PITIA includes your principal, interest, property taxes, homeowners’ insurance, and HOA or condo fees. If a property rents for $2,400/month and the total PITIA is $2,000/month, the DSCR is 1.20, meaning the property earns 20% more than the debt costs. Ternus evaluates DSCR using either actual lease income or appraiser-estimated market rents.

Most lenders consider 1.25 or higher strong, the property earns 25% more than the payment. A DSCR of 1.0 means break-even. Some lenders, including Ternus, may approve deals with a DSCR below 1.0 with a larger down payment or additional reserves. Higher ratios unlock better rates and terms, so if you can push above 1.25, you’ll get the most favorable pricing.

No. Hard money loans are short-term (6–12 months) with higher rates, designed for fix-and-flip or bridge financing. DSCR loans are long-term (up to 30 years) with lower rates, designed for buy-and-hold rental investors. Different tool, different purpose. Ternus offers both our fix & flip loans (https://www.ternus.com/loan-programs/fix-flip-loans/) for the acquisition and rehab phase, and DSCR loans for the permanent hold.

Ternus’s minimum credit score for DSCR loans is 660. Higher scores qualify for better rates and higher leverage. The average DSCR borrower across the industry sits around 739.

Yes. Expect 20–25% down. Ternus offers up to 80% LTV on purchases and rate-and-term refinances, and up to 75% LTV on cash-out refinances. The down payment can come from personal funds, business accounts, or other eligible sources.

Yes, that’s the entire point. No W-2s, no tax returns, no pay stubs, no employment verification. The property’s rental income is the only income that matters. This is what makes DSCR the go-to loan product for self-employed investors, investors with complex tax situations, and anyone tired of conventional documentation requirements.

Yes, and Ternus requires it. DSCR loans must be made to a legal business entity (LLC, LP, or corporation) with an individual personal guarantor. This is standard for business-purpose investment loans and gives you the liability protection that comes with entity ownership.

Non-owner-occupied 1–4-unit residential properties: single-family homes, duplexes, triplexes, fourplexes, condos, townhomes, and PUDs (planned unit developments). The property can be used as a long-term rental, medium-term rental, or short-term rental (Airbnb/VRBO). Must be located in one of the 39 states where Ternus lends.

Rates depend on credit score, LTV, DSCR ratio, and loan term. Ternus offers 30-year fixed-rate and hybrid ARM options. Rates change with market conditions, so call (972) 755-1880 or submit your deal online for a current quote. We’ll give you a quick and straight answer!

Ternus offers DSCR loans from $75,000 to $2,000,000 on individual properties. If you’re financing multiple rental properties, our investor rental portfolio loan program (https://www.ternus.com/loan-programs/investor-rental-portfolio-loans/) may offer higher aggregate amounts and streamlined processing.

Yes. Ternus offers cash-out refinances at up to 75% LTV. This lets you pull equity from a stabilized rental to fund your next acquisition, cover renovations, or reinvest elsewhere. Cash-out DSCR refinancing is the engine of the BRRRR strategy, and because no income docs are required, the refi moves fast.

Yes. Interest-only terms are available and can significantly improve your monthly cash flow. During the interest-only period, you’re not paying down principal — which means more cash in your pocket each month. It is particularly useful if you’re prioritizing cash-on-cash returns or holding onto your property in an appreciating market.

Industry standard is 21–45 days. Ternus accelerates the process by eliminating income documentation, one of the biggest bottlenecks in conventional closings. Having your LLC documents, property details, and insurance quotes ready before applying makes everything faster.

Conventional mortgages underwrite the borrower: income, employment, DTI, the works. DSCR loans underwrite the property, with a calculation; does the rental income cover the monthly PITIA payment of the subject property? DSCR loans also allow LLC borrowing, have no limit on the number of financed properties, and accept short-term rental income. Conventional loans may carry slightly lower interest rates, but DSCR delivers the flexibility and speed that serious portfolio investors need.

Yes. Ternus DSCR loans cover long-term, medium-term, and short-term rental strategies. For short-term rentals, the DSCR is typically calculated using projected rental income from market data or an appraiser’s estimate rather than an existing lease. This makes DSCR one of the few financing options that fully recognizes Airbnb and VRBO revenue.

Absolutely. DSCR loans are the most common tool for the refinance stage of BRRRR (Buy, Rehab, Rent, Refinance, Repeat). After rehabbing with a short-term loan such as Ternus’s Fix & Flip program you stabilize with a tenant and refinance into a 30-year DSCR loan. Cash-out up to 75% LTV. One lender from acquisition through permanent financing.

Two levers: increase income or decrease costs. On the income side, raise rents to market rate, add amenities, convert to furnished or mid-term rental. On the cost side, increase your down payment to lower the mortgage, shop for better insurance, appeal your property tax assessment, or choose interest-only payments to reduce the monthly obligation. Even moving from a 1.05 to a 1.25 DSCR can unlock meaningfully better rates. For more on the current market landscape, see our analysis of what the market shift means for real estate investors.