DSCR loans in Texas
A DSCR loan qualifies you for a rental property based on whether its rent covers the mortgage payment, not on your personal income.
How DSCR qualifying works
DSCR stands for debt-service coverage ratio. It compares a property's rent with its monthly payment.
The calculation
DSCR is the property's gross monthly rent divided by its monthly payment: principal, interest, taxes, and insurance. A ratio of 1.0 means the rent covers the payment exactly, and a higher ratio means it covers the payment with room to spare.
Rental income can be documented with a lease, a rent roll, or a market rent estimate. Lenders set their own minimum ratios, and we'll show you where your property lands before you make an offer.
Buy, refinance, or take cash out
DSCR loans work for buying a rental and for refinancing one you already own.
Who a DSCR loan fits
A good fit if
- You're buying or refinancing a rental property
- You'd rather not qualify with your personal income, for example because you're self-employed
- You own several rentals or plan to add more
- You want to close in the name of your LLC
Property types
- Single-family rentals
- 2–4 unit properties
- Short-term rentals, such as homes you rent on Airbnb
- Eligible property types vary by program
What to expect
Each lender sets its own DSCR guidelines. Here's what to expect with the programs we offer.
- Credit scores from 640, depending on the program
- Loans up to 80% of the property's value, depending on the program
- No personal income documents needed to qualify
- Down payment and reserve requirements are usually higher than for a home you live in
- Many DSCR loans have a prepayment penalty for the first 1 to 3 years. We'll show you the options.
Talk with Raghu about your rental
Raghu Ampojwalam (NMLS #2657380) leads Lotus Angel Mortgage and focuses on investment and DSCR loans. He'll go over a rental's numbers with you before you make an offer.
DSCR loan FAQ
Can I get a DSCR loan for a short-term rental?
Yes, short-term rentals can qualify, depending on the program. Lenders differ in how they count short-term rental income, so we'll match your property with a program that fits.
Can I close in the name of my LLC?
Yes. DSCR loans can close in the name of your LLC.
Do I need to show tax returns or W-2s?
No. The property's rent is what qualifies you, so no personal income documents are needed. Lenders still review your credit, the funds for your down payment and reserves, and the property itself.
Do DSCR loans have prepayment penalties?
Many do, usually for the first 1 to 3 years. We'll show you the options and what each one means for you before you decide.
Programs, guidelines, and availability change and vary by lender. All loans are subject to credit approval, underwriting, and property eligibility.
Let's look at your numbers together.
Call (817) 259-1972, schedule a consultation, or start your secure application when you're ready. Talking with us is free, and there's no credit check to get started.