Expand your real estate portfolio without the burden of personal income verification or tax return analysis. A Debt Service Coverage Ratio (DSCR) loan from Fairway allows real estate investors to qualify for single-family, multi-family, or short-term rental property financing based strictly on the cash flow generated by the property itself.
A Debt Service Coverage Ratio (DSCR) loan is a specialized Non-QM mortgage program designed specifically for residential real estate investors. Unlike traditional mortgage programs that evaluate a borrower’s personal debt-to-income (DTI) ratio through W-2s, pay stubs, or tax returns, a DSCR loan evaluates the property’s rental income against its monthly debt obligations (principal, interest, taxes, insurance, and HOA dues).
If the subject property generates sufficient rental income to cover or exceed its monthly holding costs, the loan qualifies based on the asset’s financial performance. This streamlined qualification structure allows real estate investors, landlords, and property developers to scale their rental portfolios quickly without hitting traditional agency borrowing limits.
Whether you are purchasing your first long-term rental, acquiring a multi-unit property, or refinancing a short-term vacation rental, Fairway’s DSCR program provides flexible financing tailored to investor growth strategies.
DSCR loans remove traditional financing hurdles for real estate investors. Key highlights include:
How is the Debt Service Coverage Ratio calculated?
The DSCR ratio is calculated by dividing the property’s gross monthly rental income by its total monthly mortgage obligation (PITIA: Principal, Interest, Taxes, Insurance, and HOA fees). For example, a property generating $2,500 in monthly rent with a total monthly mortgage payment of $2,000 has a DSCR of 1.25.
What DSCR ratio is required to qualify?
Most DSCR programs look for a ratio of 1.0 or higher, meaning the rental income fully covers the monthly housing expense. However, options may be available for properties with ratios below 1.0 depending on credit profile, down payment size, and liquid reserve levels.
How is rental income verified for vacant properties or short-term rentals?
For vacant long-term properties, a certified appraiser completes a market rent schedule (Form 1007) to establish expected market rental rates. For short-term or vacation rentals, qualification can often utilize historical projection reports or third-party market data tools (such as AirDNA).
Can I refinance an existing rental property with a DSCR loan?
Yes! Cash-out and rate-and-term refinance options are available under DSCR guidelines. Investors frequently use cash-out refinancing on performing rental properties to tap accumulated equity and fund future property acquisitions.
Fairway is an equal housing lender. DSCR programs are intended for business and investment purposes only and are not backed by Fannie Mae, Freddie Mac, FHA, VA, or USDA. Financial qualifications, minimum credit scores, property cash flow ratios, down payment requirements, and reserve guidelines apply. Fairway is not affiliated with any government agencies.
