What is a DSCR loan and how is DSCR calculated?
DSCR stands for debt service coverage ratio, gross monthly rental income divided by PITIA (principal, interest, taxes, insurance, association dues). A ratio of 1.0 means the rent exactly covers the payment. DSCR loans qualify the property on that ratio instead of your personal income or tax returns.
What DSCR ratio do I need to qualify in 2026?
Most lenders want at least 1.0, break-even. A 1.25 or higher lands in the prime tier with the sharpest pricing and loan-to-value up to around 80 percent. Sub-1.0 deals down to roughly 0.75 can still finance through specialty programs, with a rate premium and a lower LTV cap.
Can I use short-term rental or Airbnb income to qualify?
Yes. Most DSCR lenders will use projected short-term rental income, often average daily rate times occupancy, or a 12-month platform history where one exists. Short-term-rental files usually carry higher reserve requirements and sometimes a modest income haircut compared to a long-term lease.
What credit score do I need for a DSCR loan?
Most programs set a 620 to 660 floor, with meaningfully better pricing and loan-to-value opening up at 680, 700 and 740. A stronger score also helps offset a weaker DSCR ratio on the same file.
How much down payment does a DSCR loan require?
Plan on 20 to 25 percent down for a clean file with a healthy DSCR. Seasonal or coastal short-term rentals typically run 25 to 30 percent, and files with credit under 680 or a DSCR under 1.0 often land near 30 percent or more.
What happens if my DSCR comes out below 1.0?
A sub-1.0 DSCR means projected rent does not fully cover the payment. It can still be financeable through low-DSCR or no-ratio programs, usually with a rate premium and a lower maximum loan-to-value, or by adding to the down payment to shrink the loan and PITIA.
Do DSCR loans require tax returns or income verification?
No. DSCR loans qualify the property's rental income against its debt, not your personal income, so tax returns, W-2s and employment verification are generally not required. Credit, reserves and the property's DSCR carry the file instead.
What reserves do DSCR lenders require in Florida?
Most DSCR lenders want 6 to 12 months of PITIA in liquid reserves. Florida coastal properties and short-term-rental-heavy files are sometimes pushed higher given insurance and seasonality risk, so build reserves into the plan before you write an offer.