A DSCR loan is the one rental mortgage that doesn't care about your W-2. It cares about the property's numbers — and specifically, one number. This is a practical guide to that number, and the four others that sit next to it on every lender's grid.
What DSCR really is
DSCR stands for Debt Service Coverage Ratio. Despite the imposing name, it's arithmetic a fifth-grader can do: take the rent the property generates in a month, divide it by the debt service on the loan, and you have the ratio. A DSCR of 1.00 means the rent exactly covers the payment, the taxes, the insurance, and the HOA. A DSCR of 1.25 means the rent is 25 % larger than those obligations.
That's it. The entire underwriting premise of a DSCR loan — the thing that lets you refinance a property without handing over tax returns, pay stubs, or a W-2 — compresses into one fraction. The elegance is the point: if the property pays for itself, the bank can lend against the property rather than against you.
Most lenders set 1.00 as their floor. A handful will go below, taking the risk of a property that produces less rent than it costs to service — in exchange for a lower LTV, a higher rate, or both. A few programs don't set a floor at all, pricing instead off LTV and FICO. Those are called no-ratio DSCR loans, and they're useful when your rent projection is honest but thin — a brand-new STR, say, with great AirDNA comps but zero trailing history.
PITIA, the denominator
The P-I-T-I-A on the bottom of the fraction is what most investors get wrong. It stands for Principal, Interest, Taxes, Insurance, and HOA — and nothing else. Not management fees. Not utilities. Not the $200 a month you spend restocking paper towels and coffee pods for the Airbnb guests. Those are operating expenses, and they belong in your cash-flow analysis, not your lender's debt service analysis.
Operating expenses matter to your bottom line. PITIA matters to your loan.
This distinction is why a property can cash-flow negative in real life and still qualify for a DSCR loan at 1.0 — the lender simply isn't measuring what you're measuring. It's why Ratio shows both views on the same page: the PITIA-based DSCR the lender will quote, and the net cash-flow number you'll actually see in your bank account.
LTV, the other lever
Loan-to-Value is the second number on the grid, and on a cash-out refi it's the one investors most often push too hard. Ninety-nine percent of the time the right answer is 75 %. It's the published cash-out ceiling on most major DSCR programs for a 1-unit investment property, and it's the point where pricing stops getting worse and starts getting good.
Several programs on our board — Griffin, Kiavi, New Silver, CoreVest (single-asset), plus Defy and MoFin conditionally — publish up to 80 % cash-out. In every case the 80 % tier is gated: typically DSCR ≥ 1.00, FICO 700+ (740+ at Defy), and a slightly higher rate. In practice 80 % is a penalty tier; you're better off at 75 % almost every time. If you need more proceeds than 75 % LTV produces, that's a signal the deal's equity isn't where you thought it was — not a signal to push LTV.
STR, LTR, MTR
A DSCR loan's rental strategy matters because lenders underwrite the rent column differently depending on how it's generated.
Short-term rental (STR)
Airbnb, VRBO, weekly vacation rentals. Most programs accept AirDNA projections (the Smart Rent or equivalent line) in lieu of 12-month history — Easy Street and Defy are especially permissive. Visio accepts STR projections through its Vacation Rental Loan program but requires C4+ condition; Kiavi's current product page no longer explicitly advertises STR eligibility, so confirm before applying there. STR loans typically price 25–50 bps above the equivalent long-term rental, and most lenders apply a 10–25 % haircut to projected revenue when sizing debt service.
Mid-term rental (MTR)
30–90 day stays, usually insurance housing, travel nurses, or relocation tenants. Treated similarly to LTR by most lenders, priced like LTR, and often the sweet spot for cash flow in 2026.
Long-term rental (LTR)
Standard twelve-month lease or a 1007 market rent appraiser addendum if the property is vacant. Cleanest underwriting, best pricing, broadest lender set. If the economics work at long-term rent, take the long-term pricing.
Rates, pricing, and adjusters
DSCR rates in 2026 typically run 75 to 150 bps above the conforming 30-year fixed for primary residences. Pricing then moves in quarter-point bands based on three adjusters:
- LLPA by LTV. 65 % LTV prices materially better than 75 %. The difference is often a quarter to three-eighths of a point on the rate.
- LLPA by FICO. 760+ prices best. 720 is close. 680 is standard grid. Below 680, expect 25–50 bps of penalty per tier.
- LLPA by DSCR. Most programs tier: 1.00–1.20, 1.20–1.40, 1.40+. A property that covers at 1.35 gets a meaningfully better rate than one that covers at 1.01.
A useful rule of thumb: the quoted rate you see advertised is the best-tier rate — 760 FICO, 65 % LTV, 1.40 DSCR on a long-term rental in a good market. Real deals are usually 25–75 bps above that.
Reserves and closing costs
Two line items that don't show up on most calculators but will show up on your loan commitment:
- Reserves — typically 3–6 months of PITIA (not including operating) in a liquid account after close. Some programs count IRA balances at 70 %; some don't. If your deal is marginal, extra reserves can swing it.
- Closing costs — Ratio estimates 2.5 % of the loan amount, which is a reasonable average across lender fees, title, recording, and appraisal in 2026. Your actual GFE may swing a half-point either direction.
Five things that kill a file
- DSCR < 0.75. Below this line, you're outside of almost every published cash-out program. If your property underwrites here, the issue is rent (raise it, or pick a different strategy), taxes (check for an exemption), or the loan size (shrink it).
- Recent STR without history and no AirDNA. You need some form of projection. A single clean comp set from AirDNA, Mashvisor, or a licensed appraiser's 1007 addendum is often enough — but you can't leave the field blank.
- Condition C5 or worse. Visio and a few others require C4 minimum. A tired property that photos poorly on the appraisal can fail a desktop review even if the numbers are good.
- Seasoning. A property bought 90 days ago can cash-out refi on most programs. Fix-and-flip in month two? Some lenders want six to twelve months of seasoning before the new appraisal.
- Short-term rental restrictions. Some HOAs and municipalities ban or heavily restrict STRs. Lenders increasingly verify the local ordinance before approving on STR income.
Glossary
DSCR — Debt Service Coverage Ratio. Monthly rent divided by PITIA.
PITIA — Principal, Interest, Taxes, Insurance, HOA. The monthly debt service a lender measures.
LTV — Loan-to-Value. Loan amount divided by appraised value, expressed as a percentage.
LLPA — Loan-Level Price Adjuster. A rate (or fee) penalty applied for a specific risk factor like LTV or FICO.
1007 — An appraiser's addendum specifying market rent for a single-family rental. Standard alternative when no lease is in place.
Interest-only — A loan structure where monthly payments cover only interest, usually for a 10-year initial period, boosting DSCR at the cost of not paying down principal.
No-ratio — A DSCR variant with no minimum coverage requirement; priced off LTV and FICO alone.
Seasoning — The minimum length of ownership required before a lender will accept the property at its new appraised value.