Most programs want debt service coverage of 1.20x to 1.25x, credit around 660 to 680 or better, and 20 to 25 percent down. Personal tax returns are generally not required. The loan qualifies on the property's income.
A DSCR loan qualifies on the property's income, not your personal tax returns. The lender divides annual net operating income by annual debt service. Most commercial lenders want that ratio at 1.20x to 1.25x or better, meaning the property produces 20 to 25 percent more income than the loan payment. Some bridge and private programs will accept 1.0x or slightly below on a property that is stabilizing, priced accordingly.
If you want the ratio itself explained from the ground up, start with our plain-English guide to what DSCR is and how lenders use it.
Requirements vary by program, but the recurring list looks like this. Credit score floors commonly sit around 660 to 680, with better pricing above 700. Down payment usually runs 20 to 25 percent, so 75 to 80 percent LTV at the top end. Lenders want a rent roll and operating history on stabilized property, or a credible pro forma with market rent support on a property in transition. Reserves of 6 to 12 months of payments are common. And the property type matters: multifamily and industrial usually see the widest program menus, while specialty assets get fewer takers and tighter terms.
This is the reason the product exists. Most DSCR programs do not require personal tax returns, W-2s, or employment verification, and many do not count your other property debt the way a bank would. Self-employed investors, owners with complex returns, and buyers scaling past a bank's exposure limit are the natural fit. You will still sign personally in most cases, and the lender will still pull credit, but the deal is underwritten on the building's math.
The common miss is a ratio that comes in at 1.05x when the program minimum is 1.20x. The fixes are the levers in the formula: a larger down payment shrinks the debt service, an interest-only period lowers the payment during stabilization, documented market rents can support a higher qualifying income, and sometimes the honest answer is a bridge loan now and a DSCR refinance after the property seasons. A decline on a DSCR program is rarely the end. It is usually a sizing problem with more than one solution.
Run your numbers with our free calculators, then use the Deal Brief Builder to put the property, the loan request, and your timeline on one page. Send it over and we will give you a straight answer within one business day, including which programs in our network your ratio actually fits.
Most commercial lenders want a minimum of 1.20 to 1.25, meaning the property produces 20 to 25 percent more income than its annual debt payments. Stronger ratios earn better terms; below 1.0 the property does not cover its own payment.
Divide net operating income by annual debt service. A property with $200,000 of NOI and $127,220 of annual loan payments has a DSCR of 1.57.
Usually not from a bank, because the property does not cover its payment. Interest-only bridge financing can carry a transitional property while income is built to a level conventional lenders will finance.
Yes, substantially. Removing principal from the payment lowers annual debt service, which is why bridge lenders quote interest-only and why the same NOI supports a much larger interest-only loan.
Enter your NOI and loan terms and get the ratio instantly, with an interest-only toggle.
Read on →Coverage math decides your refinance options when a balloon matures.
Read on →What bridge lenders look at, and where coverage fits in.
Read on →Send the property, the loan amount, and your timeline. We will tell you whether it looks like something we can help with, usually within one business day.
Submit Deal DetailsNot ready to submit? You can run the DSCR numbers first.
Or just call: 801-706-2802