Mortgage Glossary
DSCR
Also called: debt service coverage ratio, dscr loan, dscr ratio
Definition
Debt Service Coverage Ratio: the rental income a property produces divided by its total monthly housing payment. A DSCR loan qualifies the property rather than the borrower's personal income.
Why it matters
It lets investors finance rentals without using tax returns or personal debt to income, though requirements vary by lender.
Example
$2,000 rent against a $1,600 payment including taxes and insurance is a 1.25 DSCR.
Related terms
- Investment Property
- A property purchased to generate rental income or appreciation rather than to occupy. It generally requires a larger down payment and carries different pricing.
- Reserves
- Verified funds left after closing, usually measured in months of the housing payment. Requirements are higher for investment properties and some jumbo loans.
- Non QM
- Loans outside the Qualified Mortgage definition, often used for bank statement, 1099, asset based and DSCR qualification. Guidelines vary widely by investor.
Written by
Manny Oloyede, Mortgage Broker
NMLS #1824463 | Ultimate Mortgage Brokers LLC NMLS #2619461 | Licensed in OH | KY | NC | PA | SC | TN | TX
I have worked in mortgage lending since 2018 out of the Akron / Cuyahoga Falls Branch, helping buyers, homeowners and investors across Northeast Ohio and every state where I am licensed. These guides reflect the questions I answer most often, written the way I would explain them on a call.
General education only, not financial, legal or tax advice, and not a commitment to lend. Guidelines vary by program and change over time. Manny Oloyede, NMLS #1824463. Ultimate Mortgage Brokers LLC, NMLS #2619461. Licensed in OH | KY | NC | PA | SC | TN | TX. Equal Housing Opportunity.
Want this applied to your actual numbers?
Definitions are the easy part. What matters is how the guideline reads against your income, credit and property.