If You’re Still Qualifying on Personal Income, Scaling May Get Hard Fast

William Thompson · 2026-04-24T07:05:00-07:00

One thing I see with a lot of investors is they keep qualifying based on personal income, and at some point that becomes the bottleneck. That's where DSCR loans start getting interesting. A DSCR loan is built more around the property’s income than your personal W-2, and the core idea is whether the property brings in enough cash flow to cover the debt. In general, DSCR looks at income versus debt service, and lenders use it to evaluate whether the property can support the payment. But here’s the catch: this is not a shortcut around knowing your numbers. You still need to know your income, your expenses, and your margins. If the deal doesn’t cash flow well, the loan product won’t save it. That’s why I tell investors all the time: financing can help you scale, but only if the property actually works. Curious how others here look at it, are DSCR loans helping investors scale smarter, or are too many people using them before they really understand their numbers?

Michelle Pepe

Rental Property Investor · Member since 2021 · 120 posts · 69 votes

5mo

I’ll be the first to say we do properties based on personal income and it’s tough. But with DSCR I have no idea where to start other than what googles told me about the loans!

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William ThompsonBusiness Member

OP

Accountant · Williamstown, NJ · Member since 2025 · 331 posts · 180 votes

5mo

Michelle, great question — and you're not alone. A lot of investors feel the same way when it comes to DSCR loans.

The biggest difference is that DSCR loans focus on the property's income, not your personal income. So instead of the bank asking "what do you make?", they're asking "does the property pay for itself?"

A good place to start is understanding the rent vs. the mortgage. If the rent covers the loan, taxes, and insurance with some room to spare, you’re usually in a good position.

That said, the terms, rates, and requirements can vary a lot depending on the lender, so having the right guidance up front makes a big difference.

If you want, I’m happy to help point you in the right direction and make this a lot easier to understand

[email protected]609-820-0891

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Stacy RaskinBusiness Member

Lender · Member since 2022 · 1k+ posts · 513 votes

5mo

DSCR loans are a great way to scale. They are also easier loans to do than DTI / personal income loans. I have worked with investors who have gone to over 20+ doors with DSCR. Others have done 1-3 doors. It just depends on investor's goals.

More on DSCR loans: DSCR loans won't use your income to underwrite the loan. DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.

Here's a bit more in detail about how rates are calculated for DSCR loans:

1. Credit score- the higher the best. 760-780+ generally gets best pricing for investment property loans with most lenders. From there every 20 point increment affect pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then going down to 740-759 and so on.

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.

4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.

I've included an example below to help illustrate this.

So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

See example below:

DSCR < 1

Principal + Interest = $1,700

Taxes = $350, Insurance = $100, Association Dues = $50

Total PITIA = $2200

Rent = $2000

DSCR = Rent/PITIA = 2000/2200 = 0.91

Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

DSCR >1

Principal + Interest = $1,500

Taxes = $250, Insurance = $100, Association Dues = $25

Total PITIA = $1875 Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

If a purchase, you also generally need reserves / savings to show you have 3-6 month payments of PITIA (principal / interest (mortgage payment), property taxes and insurance and HOA (if applicable). If a cash out refinance, many lenders will allow the cash out to satisfy the reserves requirement.

DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals. Happy to connect to discuss further.

[email protected]818-770-0340

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Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

5mo

The issue with a DSCR loan is you still need to make sure you have the down payment. At the end of the day, getting financing in real estate always boils down to having the money. That is why those who claim that it's easy to get into real estate with no money typically struggle and then get very frustrated because they've paid so much in programs telling them they can do this. In reality, it is extremely challenging. Either you have the cash or you know somebody who does. If not, it is an uphill battle.

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If You’re Still Qualifying on Personal Income, Scaling May Get Hard Fast

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