Traditional lenders want tax returns, pay stubs, and employment verification. But what if your income comes from rental properties, self-employment, or investments? That’s where DSCR loans change the game.
What Is a DSCR Loan?
DSCR stands for Debt Service Coverage Ratio. Instead of qualifying based on your personal income, DSCR loans qualify based on the property’s income. If the rental income covers the mortgage payment, you qualify.
How DSCR Is Calculated
DSCR = Monthly Rental Income ÷ Monthly Mortgage Payment (PITIA)
Example: A property rents for $2,000/month with a $1,600 mortgage payment has a DSCR of 1.25.
- DSCR of 1.0 = rental income exactly covers the payment
- DSCR above 1.0 = positive cash flow
- DSCR below 1.0 = negative cash flow (still possible with some lenders)
Hard Hat Capital DSCR Loan Terms
- Loan amounts: $75K – $3M
- Min DSCR: Only 0.80 (one of the lowest in the industry)
- Loan terms: 30 or 40-year fixed, interest-only available
- Max LTV: 80% purchase, 75% cash-out
- Property types: Single family, 2-4 units, condos, condotels
- No experience required
- Foreign nationals eligible
- Short-term rentals (Airbnb) eligible
Who Should Use a DSCR Loan?
DSCR loans are ideal for self-employed investors, full-time landlords, foreign nationals, and anyone who wants to scale a rental portfolio without income documentation holding them back.