By Brian Valdivia, CEO, Beltway Lending. Brian is a rental investor himself and finances his own properties with DSCR loans.
A DSCR loan lets you buy or refinance a rental based on the property’s rent instead of your personal income. Rates get the attention, but the lender you pick decides whether your deal closes on time, how much cash you bring, and what it costs to sell or refinance later. Here’s what to ask before you choose.
1. How do you calculate DSCR, and what’s your minimum?
DSCR is the monthly rent divided by the full payment (principal, interest, taxes, insurance, and HOA if any). A ratio of 1.0 means the rent exactly covers the payment. Ask whether the lender uses the actual lease or market rent, and whether they’ll go below 1.0. Some lenders stop at 1.0 or 1.25; others, including us, will close below 1.0 with lower leverage.
2. Can you use market rent on a vacant property?
If you’re buying a vacant rental or refinancing after a rehab, you won’t have a lease yet. Lenders that accept an appraiser’s market rent estimate let you close without waiting for a tenant.
3. What’s the minimum credit score, and how does it change my terms?
Minimums vary from lender to lender, and pricing usually improves as your score rises. Ask what score gets you their best pricing, not just the minimum. Most of our borrowers have 660 or higher, and we review lower scores case by case.
4. What documents will you need?
“No income verification” should mean no tax returns, pay stubs or employment checks. Ask for the exact list up front. Ours is a valid ID, 2 months of bank statements and a soft credit pull.
5. What’s the prepayment penalty?
Prepayment penalties are typical on DSCR loans, so don’t be surprised to see one. Ask how long it lasts and how it’s calculated. A shorter or no penalty usually means a higher rate. If you might sell or refinance soon, the penalty can matter more than a quarter-point of rate. Ask to see quotes both ways.
6. Can I close in my LLC?
Most investors hold rentals in an LLC for liability reasons. Make sure the lender closes in an entity name. Expect to personally guarantee the loan even when it’s in your LLC; that’s standard, and we require it too.
7. Do you lend in my state, on my property type?
Lenders differ by state and property type: condos, 2 to 4 units, short-term rentals, rural properties. Confirm before you pay for an appraisal. If you own rentals in several states, a lender that works across most of the country saves you from juggling several.
8. How fast do you really close, and who keeps the file moving?
Ask for a typical timeline, not the best case, and ask who your day-to-day contact is. Slow appraisals and missing documents kill more deals than rates do. A lender who chases those for you is worth a lot when you’re up against a purchase deadline.
9. Can you grow with me?
If you plan to buy more, ask about portfolio loans (several rentals under one loan and one payment) and how many loans they’ll do for one borrower. Conventional loans cap how many financed properties you can have; DSCR and portfolio loans generally don’t.
Red flags
- Rates quoted before they’ve seen the property or your credit.
- Large upfront fees before an approval.
- A documents list that keeps growing after you apply.
- No clear answer on the prepayment penalty.
Where Beltway fits
We’re investors who lend to investors, in every state except Alaska, Hawaii, Nevada, North Dakota, South Dakota and Vermont. DSCR loans from $75,000 to $5 million, 30-year fixed (40-year also available), most borrowers 660+ credit with lower scores reviewed case by case, ID plus 2 months of bank statements and a soft credit pull. Closings in as little as 10 days, typically 3 to 4 weeks. See all the details on our Loan Facts page or get a quote.
Questions investors ask
What is a good DSCR ratio?
1.0 means the rent covers the payment. Higher ratios generally get better terms, and some lenders will go below 1.0 with a bigger down payment.
Can I get a DSCR loan with no job?
Yes. DSCR loans qualify on the property’s rent, not your employment.
Can I use a DSCR loan for an Airbnb?
Often, yes. Short-term rental income is verified differently from a long-term lease; ask your lender how.
Is a DSCR loan the same as a hard money loan?
No. Hard money is short-term (usually 6 to 12 months) for buying and renovating; a DSCR loan is long-term (often 30-year fixed) for holding a rental. Many investors use hard money to buy and rehab, then refinance into a DSCR loan.
