No-Income Mortgage? DSCR Loan Requirements Everyone Must Know

What if you could qualify for a mortgage without showing any income? No W-2s, no tax returns, no employment verification—just the numbers on the property itself. That’s exactly what a DSCR loan, or Debt Service Coverage Ratio loan, offers. Also known as a cash flow loan, it’s one of the most misunderstood and underused tools in real estate investing.

What Makes DSCR Loans Different

Traditional mortgages focus on your personal income—asking, “Do you make enough money to buy this house?” DSCR loans flip that script. Instead, they ask, “Does the property make enough money to cover itself?”

If the rent can cover the full mortgage payment (including taxes and insurance), the property qualifies. That’s it. Lenders calculate this by dividing the rent by the mortgage payment. For example, if rent is $2,000 and the mortgage is $1,800, the DSCR is 1.11. Most lenders want to see a ratio between 1.0 and 1.25 or higher—the higher, the better.

Who Can Benefit From a DSCR Loan?

These loans are especially useful for:

• Investors purchasing properties under an LLC who don’t want the loan in their personal name

• Self-employed borrowers with solid cash flow but complicated tax returns

• Retirees with strong assets but low monthly income

• Parents buying rentals for their kids without co-signing a traditional loan

• Investors purchasing 5–8 unit properties that don’t qualify for conventional financing

These aren’t rare cases—they’re everyday real estate situations where DSCR loans shine.

Why DSCR Loans Exist

Unlike traditional mortgages sold to Fannie Mae or Freddie Mac, DSCR loans are portfolio loans, meaning lenders keep them in-house. Because of that, guidelines vary between lenders, and not every bank offers them. They’re not built with the borrower in mind—they’re designed for the lender’s portfolio flexibility. Still, for the right buyer, they’re an incredibly powerful tool.

What You Need to Know Before Applying

Every loan type has trade-offs. Here’s what to expect with DSCR financing:

• Down Payment: Typically 20–25%

• Interest Rates: Usually 1–2% higher than conventional loans

• Prepayment Penalties: Common if you sell or refinance too soon

• Reserves: Lenders will require you to show available assets

• Usage: Strictly for investment or business properties—you can’t live in them

The trade-off? No income verification, no debt-to-income calculations, and no waiting on your CPA. If the rent covers the mortgage, you’re in.

Real-World Example

Let’s say a property rents for $2,500 per month, and the total mortgage payment (including taxes and insurance) is $2,000. That’s a 1.25 DSCR, a strong ratio. You wouldn’t need to show employment history, tax returns, or profit statements. The property’s own cash flow qualifies you.

You don’t have to be a veteran investor either—this loan can help first-time investors buy a duplex, parents solve a family housing need, or business owners who typically get punished for “tax efficiency” finally qualify.

Why DSCR Loans Are So Underused

They’re not complicated—just unfamiliar. Most agents and buyers simply don’t know how they work. But once you understand the math and see how flexible they can be, you’ll realize they’re one of the smartest financing tools for growing a real estate portfolio.

Try It Yourself

Curious if your deal would qualify? You can use a simple DSCR calculator at ClearMortgagePlan.com to run your own numbers—just plug in your rent and mortgage to see your ratio.

When talking to a lender, be sure to ask:

• Do you offer DSCR loans?

• What’s the minimum loan amount and down payment?

• Can I close in an LLC?

• Are there prepayment penalties?

If your lender hesitates on those answers—it might be time to talk to someone who knows DSCR loans inside and out.

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Bottom line: DSCR loans let the property’s performance do the talking. For investors, entrepreneurs, and self-employed borrowers, they’re the key to unlocking opportunities that traditional financing often can’t touch.