What is a DSCR loan and how do you qualify for one?

In practice

Leverage moves with credit score, loan size, and purpose together rather than one at a time. At 700 and above, a loan at or below $1.5 million can reach 80% on purchase and rate-and-term and 75% on cash-out. The same score above $1.5 million steps down to 75% and 70%. At 680, purchase and rate-and-term hold at 80% below $1.5 million but cash-out falls to 70%. At 660, purchase and rate-and-term reach 75% and cash-out 65%.

That structure rewards the two things a lender can verify cheaply — score and loan size — and it means a borrower near a threshold has a concrete lever. Fifteen points of score improvement or a modest reduction in loan amount can change available proceeds materially.

The low-coverage band is the provision most investors do not know exists. A property that does not fully cover its payment can still qualify, at reduced leverage, provided credit is strong enough. That opens acquisitions in markets where purchase prices have outrun rents, which describes much of the current investor landscape.

DSCR is our secondary product. Small balance commercial is the primary lane, and the two respond to different market forces — commercial demand is being driven by a maturity wall, while investor demand tracks cap rates and rent growth.

What could change the answer

Where a DSCR file does not fit, the three levers are loan amount, credit, and purpose. Reducing the loan amount can move a file into a lower LTV band or a better pricing tier. Improving the deciding score can lift both leverage and coverage flexibility. And converting a cash-out request to rate-and-term frequently unlocks 5 to 10 points of additional leverage.

Leverage by score and loan size

Standard coverage, above 1.00x

Low coverage, 0.75x to just under 1.00x — available at 660 for single-unit property, and at 680 and above for one-to-four units.

Absolute minimum coverage is 0.75x. Inexperienced investors require 1.00x.