Direct answer
A DSCR loan is an investment-property financing product where the property’s rental income relative to its debt obligations is a major underwriting consideration. It can be useful for investors whose financing strategy is centered on the property’s economics rather than only traditional personal-income underwriting.
How DSCR is viewed
Debt service coverage ratio compares qualifying property income with required debt payments. Capital providers can calculate or qualify income and expenses differently, so a borrower should not assume one universal threshold or formula applies to every program.
What lenders also review
DSCR is only one part of the transaction. Property type, value, leverage, borrower credit, liquidity, entity structure, market and loan purpose can also affect eligibility.
When it may fit
DSCR financing can be relevant for stabilized rental acquisitions and refinances when the investment property produces enough qualifying income to support the proposed debt.