The DSCR Loan Process: From Application to Close

1. Property Identification & Rental Analysis

Unlike a standard loan, the first step is verifying the potential income of the property.

• For Leased Properties: We use the current lease agreement.
• For Vacant Properties: An appraiser completes Form 1007 (Fair Market Rent Schedule) to determine what the property should rent for.

2. Calculating the Ratio

We compare the expected rent to the total mortgage payment:

• DSCR > 1.0: The property is "cash flow positive." It generates more rent than the debt costs.
• DSCR < 1.0: The property is "short" each month. Some lenders still fund these (often called "No-Ratio" loans), but they may require a higher down payment.

3. Appraisal & Underwriting

The appraiser performs a standard valuation PLUS the rent schedule. Underwriting focuses on:

• The Property: Is it in good condition?
• Your Credit Score: Usually, a 620–640 minimum is required.
• Liquidity: Verifying you have enough "reserves" (usually 3–6 months of payments) in the bank.

4. Fast-Track Closing

Since there are no tax returns to verify or employer phone calls to make, DSCR loans often close significantly faster than conventional mortgages—sometimes in as little as 21 days.

 Why Investors Choose DSCR

• Infinite Scalability: Since your personal Debt-to-Income (DTI) ratio isn't checked, you can own 5, 10, or 50 properties without being "maxed out."
• No Employment Verification: Perfect for full-time investors or those who are newly self-employed.
• LLC Friendly: You can close the loan in the name of your LLC to protect your personal assets.

 Quick Reference Table

Feature	DSCR Loan	Conventional Investment
Qualifying Factor	Property Cash Flow	Personal Income (DTI)
Tax Returns	Never Required	2 Years Required
Employment Check	Not Required	Required
Limit on Properties	Unlimited	Typically capped at 10