How to Qualify for a DSCR Loan in 2026: Step-by-Step Guide
A practical walkthrough for real estate investors looking to qualify for a DSCR loan in 2026 — from calculating your ratio to choosing the right lender.
If you’re a real estate investor looking to finance a rental property without providing tax returns or proving personal income, a DSCR loan is likely your best option. Here’s a practical guide to qualifying in the current market.
Step 1: Know Your Numbers
Before you approach any lender, calculate the property’s DSCR yourself. You need three numbers: expected monthly rent, monthly operating expenses (taxes, insurance, management, maintenance), and the estimated monthly mortgage payment.
DSCR = (Monthly Rent - Operating Expenses) / Monthly Mortgage Payment
Most lenders want to see 1.25x or higher. Some will accept 1.0x with rate adjustments. Use our DSCR Calculator to run the numbers before you shop for a loan.
Step 2: Check Your Credit
DSCR loans don’t require income verification, but they absolutely require a credit check. Most lenders set their minimum at 620-680, but here’s what matters: the better your credit score, the better your rate. A borrower with a 740+ score might get rates 1-2% lower than someone at 660. That difference can turn a marginally cash-flowing deal into a strong one.
Step 3: Prepare Your Down Payment
Expect to bring 20-25% down for a DSCR loan. If you’re purchasing a $400,000 property at 75% LTV, that’s $100,000 cash to close (plus closing costs). Some lenders offer 80% LTV, but rates are typically higher.
Many investors use a HELOC on another property, a business line of credit, or cash from a recent sale to fund down payments. DSCR lenders generally don’t restrict the source of funds the way conventional lenders do.
Step 4: Choose the Right Lender
Not all DSCR lenders are created equal. Key differences include minimum DSCR requirements, rate pricing at different credit score tiers, closing speed, prepayment penalty structures, and whether they lend in your target state.
Browse our DSCR lender directory to compare options side by side.
Step 5: Get Your Appraisal
The appraisal is the most critical piece of the DSCR loan process. The appraiser will determine the property’s market value (which sets your LTV) and the market rent (which drives your DSCR calculation). If the property is already rented, your existing lease helps, but the appraiser will still provide an independent rent estimate.
What’s Different in 2026?
The DSCR market has matured significantly. Competition among lenders has pushed rates down from their 2023-2024 peaks, and minimum DSCR requirements have loosened at many lenders. We’re seeing more options for lower credit scores, higher LTV programs, and expanded property types including short-term rentals and small multifamily.
That said, insurance costs and property taxes continue to rise in many markets, which directly impacts your DSCR. Run your numbers conservatively and account for realistic expense increases.