DSCR Loan Guide: No Income Mortgage Loan for Multi-Unit Rental Properties
Investing in multi-unit rental properties can be a lucrative strategy for generating passive income, but securing financing can be a major hurdle—especially for borrowers who don’t have traditional income documentation. This is where Debt Service Coverage Ratio (DSCR) loans come in. These no-income verification loans allow real estate investors to qualify for financing based on their property’s rental income rather than personal income.
In this guide, we’ll break down everything you need to know about DSCR loans for multi-unit rental properties, including:
✅ What DSCR Loans Are & How They Work
✅ Who Qualifies for a DSCR Loan
✅ Key Benefits of No-Income DSCR Loans
✅ DSCR Loan Requirements & Terms
✅ Step-by-Step Process to Secure a DSCR Loan
✅ Where to Find DSCR Loan Lenders
By the end of this guide, you’ll have a clear roadmap for using a DSCR loan to finance your next multi-unit rental property—without the hassle of proving personal income.
What Is a DSCR Loan?
A Debt Service Coverage Ratio (DSCR) loan is a no-income mortgage designed for real estate investors. Instead of using personal income (W-2s, tax returns, or pay stubs), lenders determine eligibility based on the property’s rental income compared to the debt obligations.
How DSCR Works
Lenders use the Debt Service Coverage Ratio (DSCR) formula to assess a property’s ability to cover its mortgage payments:
[
DSCR = \frac{\text{Gross Rental Income}}{\text{Monthly Debt Obligations (PITI)}}
]
- A DSCR of 1.0 means the property breaks even (rental income = mortgage payment).
- A DSCR above 1.0 means the property generates positive cash flow.
- A DSCR below 1.0 means the property does not generate enough income to cover the mortgage.
Most DSCR lenders require a minimum ratio of 1.0 to 1.25, but some offer No-Ratio DSCR Loans, which means they don’t require a minimum DSCR.
Who Qualifies for a DSCR Loan?
DSCR loans are ideal for:
✔ Real estate investors with multiple rental properties
✔ Self-employed borrowers with complex tax returns
✔ Foreign investors with no U.S. income history
✔ Retirees investing in rental properties
✔ House flippers & Airbnb hosts looking for easy financing
Unlike traditional mortgages, DSCR loans allow investors to qualify based on rental income alone, making them an excellent option for those who may have high expenses, tax write-offs, or variable income.
Key Benefits of DSCR No-Income Mortgage Loans
✅ No Income Verification Required
You don’t need tax returns, W-2s, pay stubs, or employment verification to qualify.
✅ Fast & Streamlined Approval Process
DSCR loans close much faster than conventional loans, often within 2 to 4 weeks.
✅ Ideal for Multi-Unit Properties
DSCR loans work well for duplexes, triplexes, fourplexes, and large apartment buildings.
✅ Use for Airbnb & Short-Term Rentals
Many DSCR lenders allow vacation rentals, Airbnbs, and short-term rental income to qualify.
✅ Finance LLC-Owned Properties
Unlike traditional loans, DSCR lenders allow purchasing or refinancing under an LLC for asset protection.
✅ Flexible Property Types
DSCR loans can finance:
✔ Single-family rentals (SFRs)
✔ Multi-unit buildings (2-4 units, 5+ units)
✔ Mixed-use properties
✔ Airbnbs & short-term rentals
✔ Condos & townhomes
✅ No Limits on the Number of Mortgages
Traditional loans limit the number of financed properties (often 10). DSCR loans allow unlimited rental properties.
DSCR Loan Requirements & Terms
Lenders offering DSCR loans each have different requirements, but here’s what to expect:
1. Credit Score Requirements
- Minimum credit score: 680+
- Some lenders may accept 620+ with higher rates
2. Loan-to-Value (LTV) Limits
- Purchase: Up to 80% LTV
- Refinance: Up to 75% LTV
- Cash-Out Refinance: 65-70% LTV
3. DSCR Ratio Requirements
- Typical minimum DSCR: 1.0 – 1.25
- No-Ratio DSCR Loans available (ideal for properties not yet generating rental income)
4. Loan Amounts
- Minimum: $100,000
- Maximum: $5M+ (depends on lender)
5. Loan Terms
- Interest Rates: Typically prime + 1-2%
- Fixed & Adjustable-Rate Options available (5/1 ARM, 30-year fixed, etc.)
- Prepayment Penalties May Apply (Check lender terms)
6. Property Appraisals
- Desktop or Full Appraisal Required
- Rent schedule (Form 1007) may be needed to estimate rental income
7. Down Payment Requirements
- Typically 20-25% down for purchases
- Lower down payments may be available for strong borrowers
How to Get a DSCR Loan for Multi-Unit Rental Properties
If you’re interested in securing a DSCR no-income loan, follow these steps:
Step 1: Check Your Credit Score
Ensure you meet the minimum credit score requirement (typically 680+).
Step 2: Estimate Your DSCR Ratio
Use this formula:
[
\text{DSCR} = \frac{\text{Monthly Gross Rent}}{\text{Monthly Mortgage Payment (PITI)}}
]
If your DSCR is 1.0 or higher, you’ll likely qualify. If below 1.0, look for a No-Ratio DSCR loan.
Step 3: Gather Property Information
Lenders will ask for:
✔ Property address & type
✔ Lease agreements (if applicable)
✔ Current rent roll or rental income estimate
Step 4: Apply with a DSCR Lender
Since banks don’t offer DSCR loans, work with a private lender, mortgage broker, or direct non-QM lender specializing in investor loans.
Step 5: Get an Appraisal & Approval
Lenders will order an appraisal and rent schedule to confirm property value and rental income.
Step 6: Close & Fund Your Loan
Once approved, DSCR loans fund within 2 to 4 weeks—much faster than conventional loans.
Where to Find DSCR Loan Lenders
Since traditional banks don’t offer DSCR loans, you’ll need to work with:
✔ Direct private lenders
✔ Mortgage brokers specializing in investor financing
✔ Hard money lenders (short-term DSCR options)
✔ Online non-QM mortgage lenders
Final Thoughts: Is a DSCR Loan Right for You?
If you’re a real estate investor looking for a simple, fast, and no-income verification mortgage, a DSCR loan can be an excellent solution. These loans allow you to qualify based on rental income, making them ideal for multi-unit rental property investors who prefer hassle-free financing.
🚀 Looking to finance your next rental property? Start exploring DSCR loan options today! 🚀
Streamlining Small Loans for Rental Properties with GHC Funding
When it comes to securing financing for rental property investments, the process can often feel overwhelming and time-consuming. Between lengthy applications, in-depth appraisals, and waiting for approvals, many investors find themselves bogged down in red tape. That’s where GHC Funding steps in to simplify the process.
GHC Funding is revolutionizing the way small loans for rental properties are handled by offering a streamlined, hassle-free approach. With their innovative 1-page application and desktop appraisals, they make it easier than ever for property investors to secure the financing they need.
The 1-Page Application: Simple and Efficient
Gone are the days of filling out stacks of paperwork just to apply for a loan. GHC Funding’s 1-page application is designed with simplicity in mind, allowing borrowers to provide essential information quickly and efficiently. This no-nonsense approach not only saves time but also reduces stress for busy investors who are juggling multiple responsibilities.
Whether you’re looking to purchase a new rental property, refinance an existing one, or cover unexpected expenses, the 1-page application gets you one step closer to achieving your goals without unnecessary delays.
Desktop Appraisals: Speed Without Sacrifice
In addition to the simplified application process, GHC Funding utilizes desktop appraisals to expedite the loan approval process. Unlike traditional appraisals that require on-site visits and can take weeks to complete, desktop appraisals leverage technology and available data to provide accurate property valuations in a fraction of the time.
This innovative approach ensures that you can move forward with your investment plans quickly, without sacrificing the reliability of the appraisal process. It’s a win-win solution for both lenders and borrowers.
Why Choose GHC Funding?
GHC Funding’s commitment to efficiency and simplicity makes them a standout choice for small rental property loans. By offering a streamlined process with their 1-page application and desktop appraisals, they’re helping investors save time, reduce headaches, and focus on what matters most: growing their rental property portfolios.
Whether you’re a seasoned real estate investor or just starting out, GHC Funding provides the tools and support you need to succeed. With their innovative approach, you can secure the financing you need quickly and confidently.
Ready to take the next step in your rental property journey? Explore the opportunities with GHC Funding and see how they can help you achieve your investment goals with ease.
