1st Advantage MortgageHome / Requirements
Checklist
DSCR loan requirements
Credit, cash, ratio, property and paperwork, in plain language.
Across our lender network where lender guidelines allow it: credit from about 600, purchase leverage up to 85%, reserves from none to roughly six months or more, a ratio of 1.0 or better (Depending on the lender, programs go to about 0.75), loan sizes from about $100,000 to $3 million, and an investment property you will not live in. The loan qualifies on the property's rental income instead of personal income documents.
These are ranges, not a promise. No program offers all of them at once, and guidelines change. Your quote shows what applies to your file. See programs at a glance for more.
What lenders ask for
| Item | Typical range |
|---|---|
| Credit score | As low as 600 where lender guidelines allow it, 620 to 680 on many, around 680 for first-time investors, 700 and up for the best terms |
| Cash down | Purchases commonly 75% to 80% LTV and up to 85% where lender guidelines allow it. Cash-out commonly 65% to 75% and up to 80% where lender guidelines allow it |
| Ratio | 1.0 or higher is the common benchmark. About 0.75 where lender guidelines allow it, and no-ratio on a few |
| Loan amount | Roughly $100,000 to $2 million or $3 million, higher where lender guidelines allow it |
| Reserves | None where lender guidelines allow it, about 3 to 6 months of PITIA on many, more for first-time, foreign national, large and low-ratio files |
| Experience | First-time investors where lender guidelines allow it. 5 to 8 unit buildings generally want an experienced investor |
| Income documents | Not the basis for approval. The property's rental income qualifies the loan |
Credit
Your credit report is reviewed even though your income is not. A better score tends to unlock more leverage, fewer reserves and better pricing. A lower score can cap the loan-to-value or raise the rate.
Cash to close
Think of three buckets: the down payment, closing costs and reserves. A typical purchase needs 20% to 25% down. Condos, short-term rentals, 5 to 8 unit buildings, foreign nationals and ratios under 1.0 usually need more. Depending on the lender, programs accept gift funds with conditions, and cash-out proceeds can count toward reserves on some.
The property
- Investment property only, never your primary residence
- Single-family, townhome, 2 to 4 unit and many warrantable condos, plus 5 to 8 unit and non-warrantable condos where lender guidelines allow it
- Rentable condition: working systems, no major repairs outstanding
- Insured, with flood coverage where the property is in a flood zone
- Rural and unusual properties have fewer lender options and often lower leverage
What you will not need
- Qualification rests on the property's rental income
- Personal income documents such as tax returns, W-2s and pay stubs are not the basis for approval
- Employment is not used as an income test
- No debt-to-income calculation, since your personal debts are not part of the ratio
Documents you will usually send
| Document | Why it is needed |
|---|---|
| Government ID | Identity and compliance checks |
| Credit authorization | So the lender can pull your report |
| Bank or brokerage statements | Cash to close and reserves |
| Lease or purchase contract | Rent and price |
| Insurance quote | The insurance line in PITIA |
| Entity documents, if applicable | Operating agreement, EIN letter and good standing certificate for an LLC |
| Business-purpose certification | DSCR loans are business loans, and you sign a statement saying so |
Run your numbers in the calculator, then ask for a quote.
Frequently asked questions
What score do I need to qualify?
The floor sits near 600 where lender guidelines allow it, and plenty start between 620 and 680. First-time investor options usually begin close to 680. A stronger score can bring higher leverage, fewer reserves and better pricing. The requirements page goes deeper.
How much money should I bring to closing?
On a typical purchase, expect 20% to 25% down, closing costs and reserves. Strong files reach 85% loan-to-value where lender guidelines allow it, which cuts the down payment to 15%, while first-time investors more often top out near 80%. Short-term rentals, condos, small apartment buildings and thin ratios tend to need more.
How many months of reserves will a lender ask for?
Reserves are the liquid funds still in your accounts after closing, measured in months of PITIA. The range runs from none where lender guidelines allow it to about six months, and goes higher for first-time investors, foreign nationals, large loans and low ratios. Where lender guidelines allow it, cash-out proceeds can count toward the requirement.
Will I need to send my tax returns?
No, on every DSCR program. We do not collect tax returns, W-2s, pay stubs or any other proof of income. What we do collect is ordinary file material: credit, ID, statements showing your down payment and reserves, and paperwork for the property and its rent.
Can I use this loan on a fixer?
DSCR loans expect a rentable property. A home needing major work is usually bought with other financing and refinanced once it is rented or ready to rent. Tell us your plan and we will suggest a path.
Can I buy the home I will live in with this loan?
No. DSCR loans are business-purpose loans on property you will not occupy. For a home you will live in, ask about owner-occupied programs.