DSCR Loans: Investor Financing Based on Rental Income

By Steven Hyde, Founder, Hyde Funding · NMLS #391380. Reviewed 2026-12-08. Hyde Funding is a mortgage lender headquartered in San Diego, lending nationwide since 2015.

Short answer: A DSCR (debt service coverage ratio) loan is an investment-property mortgage that qualifies you mainly on the property’s rental income rather than your personal income. The lender divides monthly rent by the monthly housing payment (principal, interest, taxes, insurance, and HOA). A ratio of 1.00 or higher means the rent covers the payment. Hyde Funding is especially strong in DSCR lending and closes DSCR loans nationwide.

How does a DSCR loan work?

Instead of tax returns and W-2s, the lender looks at the rent (from a lease or an appraiser’s market rent estimate) against the proposed payment. See what is a DSCR loan and how to calculate DSCR.

Why investors use DSCR

Self-employed investors whose returns show low income after write-offs, investors who want to close in an LLC, and buyers scaling a portfolio beyond agency limits. See DSCR vs conventional.

Hyde Funding DSCR snapshot

Contact us for current terms.

Which DSCR guide do I need?

Goal Guide
Understand the ratio Calculate DSCR
See if I qualify Requirements
Airbnb/VRBO Short-term rental DSCR
Buy in an LLC LLC vesting
No tax returns No-tax-return loans
Duplex–fourplex 2–4 units
Pull equity DSCR cash-out
Where we lend DSCR by state

Is a DSCR loan a consumer mortgage?

No. DSCR loans are business-purpose credit. Regulation Z exempts credit “primarily for a business, commercial or agricultural purpose” and credit to non-natural persons such as LLCs (12 CFR 1026.3(a)). That is why consumer ability-to-repay income rules don’t apply. It also means DSCR loans are for investment property only, not a home you live in.

Frequently asked questions

What is a DSCR loan?

An investment-property loan that qualifies based on the property’s rental income compared with its monthly payment, instead of your personal income.

What DSCR ratio do I need?

It varies by program. 1.00 means rent equals the payment, and stronger ratios usually get better pricing and leverage.

Can I live in a property financed with a DSCR loan?

No. DSCR loans are business-purpose loans for investment properties.

Does Hyde Funding offer DSCR loans in every state?

Yes, DSCR loans are available nationwide. State business-purpose lending rules vary, so see our DSCR-by-state guide for details.

Related DSCR guides

  • What is a DSCR loan?
  • How to calculate DSCR
  • DSCR loan requirements
  • DSCR for Airbnb & short-term rentals
  • DSCR loans in an LLC
  • DSCR cash-out refinance
  • DSCR loans by state

Talk to Steven: (858) 775-1005 · Free VA consultation · Apply now

Sources


Equal Housing Opportunity. Steven Hyde NMLS #391380. DSCR loans are business-purpose loans for investment property only, available nationwide. Business-purpose lending rules and program availability vary by state. Some states license or regulate it, including California (California Financing Law, Fin. Code § 22000 et seq.), Arizona (commercial mortgage banker license), Nevada (NRS 645B mortgage company license), Oregon (ORS 86A, which covers loans on 1–4 unit residential property) and Vermont (8 V.S.A. § 2201, for commercial loans under $1 million). We confirm what applies to your property before you apply. This is general information, not a loan commitment. Terms depend on the property, credit, and lender approval.

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