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What's a DSCR Loan and Should You Get One?

July 22, 2026

A DSCR loan finances rent-ready income properties, qualifying borrowers based on the property's debt service coverage ratio (DSCR), which compares rental income to loan payments. It requires a 20% down payment, a DSCR around 1.25 or higher, and reserves for mortgage payments. Pros include easier qualification and faster processing; cons include higher rates and prepayment penalties. Alternatives include conventional, commercial, fix-and-flip, and SBA loans.

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