DSCR Loans — Are They Driving Your Scaling Strategy?

[Kelly Schroeder]

I've been hearing a lot about investors using DSCR loans to scale beyond conventional caps. Since the approval is based on property income, not W2s, it seems to line up well with building momentum in 2025.

For lenders and investors here:

- Do you see DSCR as a sustainable way to scale portfolios long-term?
- Are terms improving or tightening this year compared to past years?
- Any creative structures you’ve seen borrowers use to maximize DSCR approvals?

Would love to hear the community's perspective on whether DSCR is still the go-to tool for scaling strategies.

[Jackie Carmichael]

Kelly — great topic, DSCR has definitely become one of the main levers for scaling portfolios in the last few years. A couple of thoughts from the lending side:

1. Long-Term Sustainability

Yes — as long as you’re buying right. Since approvals hinge on property cash flow, DSCR loans let investors keep adding doors without hitting personal income caps. For those who underwrite conservatively (realistic rents, higher OPEX assumptions), it’s a sustainable strategy.

2. Terms in 2025

Compared to the last 18 months, I’m seeing terms stabilize. Rates aren’t as volatile, LTVs are still topping out around 75–80%, and most lenders are holding the line at 1.0–1.1x DSCR minimums. Borrowers with stronger credit/profiles are sometimes getting better pricing or IO options.

3. Creative Structures

• Portfolio DSCR loans: bundling multiple rentals into one loan to smooth DSCR across the pool.
• Interest reserves on value-add rentals: lets investors finance rehab, stabilize, and then refi once DSCR improves.
• Seller carry + DSCR combo: layering a small seller second behind a DSCR loan when the lender permits, reducing cash in.

On my side, I work with investors daily on DSCR and bridge-to-DSCR strategies. The common theme is simple: use DSCR to hold stabilized properties, but don’t be afraid to use bridge capital to get them stabilized in the first place.

Curious — are you seeing more of your peers lean toward DSCR for long-term holds, or is the appetite still split with short-term flips?