How DSCR Loans Work
DSCR stands for Debt Service Coverage Ratio. A DSCR loan qualifies the borrower based on the property's rental income relative to the proposed mortgage payment, not the borrower's personal employment income, W-2s, or tax returns. If the property generates enough rent to cover the debt service at the required ratio, the loan can be approved. The minimum DSCR on most programs is 1.0, meaning gross monthly rent must equal or exceed the monthly payment including principal, interest, taxes, insurance, and HOA. Some programs allow below 1.0 DSCR with compensating factors such as a larger down payment or stronger credit. For vacant properties, most programs use a market rent analysis from the appraiser rather than an actual lease.
For real estate investors, DSCR is the most scalable financing structure available. Each property is underwritten independently on its own income metrics with no conventional cap on the number of loans you can hold. Investors use this to build rental portfolios without hitting the personal income limits that conventional financing imposes. DSCR programs available through Surge Financial offer 30-year fixed terms and ARM options, loan amounts from $75,000 to $5,000,000 or more, rates starting at 5.75%, and LTV up to 80% on qualifying purchases. SFR, 2-10 unit multifamily, condos, townhomes, and short-term rentals are all eligible. Minimum credit score is 620 on most programs, with 680 required for maximum leverage options.
How It Works
Do You Qualify?
These are the minimum thresholds. Borrowers with a 700 or higher credit score, a DSCR of 1.10 or above, and LTV at or below 75% qualify for the strongest rates and terms. First-time investors are eligible on most programs.
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