# DSCR loan

> A DSCR loan qualifies a rental property on its rent divided by the full monthly payment, not your income. The ratio, an example and the caveats.

URL: https://mortgage-math-us.com/glossary/dscr-loan/  
Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team

## Quick answer

**A DSCR loan** is an investor mortgage that qualifies a rental property on its debt service coverage ratio — the monthly rent divided by the full monthly payment of principal, interest, taxes, insurance and any association dues (PITIA) — instead of on the borrower’s personal income.

## Key facts

| Fact | Value | Source | As of |
|---|---|---|---|
| Share of rent a conventional loan counts, for comparison | 75% | [Fannie Mae Selling Guide B3-3.8-02](https://selling-guide.fanniemae.com/sel/b3-3.8-02/rental-income-subject-property) | Sep 2, 2026 |
| Conventional maximum LTV, investment purchase | 85% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 |

## Working out the ratio

> **Worked example: A $400,000 rental with 25% down**
>
> Loan $300,000 at 7.24%: principal and interest $2,044, plus taxes about $297 at 0.89% and insurance about $163 — a PITIA of $2,504. With rent of $3,000, the DSCR is $3,000 ÷ $2,504 = 1.20.

A ratio of 1.00 means the rent exactly covers the payment; below 1.00 you make up the gap yourself. Each lender sets its own minimum ratio, down payment and rate — there is no federal or Fannie Mae standard for these loans. By comparison, a conventional investment loan counts 75% of the rent ($2,250 here) and also looks at your income.

## Why the rules vary

Credit to buy or improve rental property you won’t live in counts as business-purpose credit under Regulation Z, so consumer protections such as the ability-to-repay rule and the Loan Estimate don’t apply. That is why DSCR loans are often grouped with [non-QM loans](https://mortgage-math-us.com/glossary/non-qm-loan/), and why reading the note for [prepayment penalties](https://mortgage-math-us.com/glossary/prepayment-penalty/) matters. See the [DSCR loans guide](https://mortgage-math-us.com/loan-types/dscr-loans/) and [second home vs investment property](https://mortgage-math-us.com/blog/buying-a-second-home-or-rental/).

## Related terms

- [PITI](https://mortgage-math-us.com/glossary/piti/)

## Sources

- [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year)
- [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data)
- [Fannie Mae Selling Guide B3-3.8-02](https://selling-guide.fanniemae.com/sel/b3-3.8-02/rental-income-subject-property) — Fannie Mae: share of gross monthly rent counted as net rental income (subject property) (Sep 2, 2026)
- [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae maximum LTV, one-unit investment property purchase (Apr 1, 2026)
- [CFPB: Official interpretation of 1026.3 (business-purpose rental property)](https://www.consumerfinance.gov/rules-policy/regulations/1026/interp-3/)

_General information, not financial advice._