MAC REAL ESTATE SERVICES
DSCR Loans & 2nd Lien Mortgages
Investor & Homeowner Financing — Answered by 25 Years of Expertise
RocklinBroker.com | Rocklin, California
Whether you’re scaling a rental portfolio or tapping the equity in your home, understanding your financing options is critical. Below, we answer the most common questions about DSCR loans for real estate investors and 2nd lien mortgages for homeowners — based on 25 years of structuring these deals across Sacramento and Placer County.
DSCR Loans — The Fundamentals
What is a DSCR loan?
A DSCR (Debt Service Coverage Ratio) loan is a mortgage designed for real estate investors that qualifies you based on a property’s rental income — not your personal income. No W-2s, no tax returns, no pay stubs. If the property generates enough rent to cover the mortgage payment, you can qualify. This makes DSCR loans one of the most powerful tools for investors who want to grow a portfolio without traditional income documentation holding them back.
How does the DSCR ratio work?
The formula is simple:
DSCR = Monthly Rental Income ÷ Monthly PITIA
PITIA = Principal + Interest + Taxes + Insurance + Association Fees
Here’s what the numbers mean:
- DSCR of 1.25 or higher — strong cash flow, best rates and terms
- DSCR of 1.0 — the property breaks even (rent exactly covers the payment)
- DSCR below 1.0 — the rent doesn’t fully cover the payment; some lenders still qualify down to 0.75
Example: A Rocklin rental with $3,200/month rent and a $2,600/month PITIA has a DSCR of 1.23 — that qualifies with strong terms at most lenders.
Who is a DSCR loan best for?
DSCR loans are ideal for:
- Self-employed investors whose tax returns show high write-offs and low net income
- Portfolio builders who’ve hit the conventional 10-property limit
- Foreign nationals investing in U.S. rental property
- LLC and entity buyers — DSCR loans can close in the name of your business entity
- Short-term rental (Airbnb) operators — some lenders accept projected STR income
- Investors who want speed — DSCR loans close in 14–21 days with minimal documentation
What are the minimum requirements for a DSCR loan?
| Requirement | Typical Range | Notes |
|---|---|---|
| Minimum DSCR | 0.75 – 1.0 | 1.0+ is standard; some lenders go to 0.75 |
| Credit Score | 620 – 680+ | 720+ gets best pricing; every 20 points matters |
| Down Payment | 15 – 25% | Higher DSCR + higher FICO = lower down payment |
| Maximum LTV | 75 – 85% | Up to 85% for strong borrowers on SFR purchases |
| Cash Reserves | 6 – 12 months PITIA | Sub-1.0 DSCR typically requires 12 months |
| Loan Amounts | $75,000 – $5,000,000+ | Varies by lender; some go to $6M+ |
| Income Docs | None | No W-2s, tax returns, or pay stubs required |
| Property Limit | No limit | Unlike conventional’s 10-property cap |
What interest rates can I expect on a DSCR loan?
DSCR loan rates typically run 0.5–1.5% higher than conventional mortgage rates — generally in the 6–8% range as of 2026, depending on your credit score, down payment, DSCR ratio, and property type. A borrower with a 740+ FICO, 25% down, and a 1.25+ DSCR can expect rates near the low end of that range. We shop across multiple wholesale lenders to find the most competitive DSCR pricing available for your specific deal.
What property types qualify for DSCR loans?
DSCR loans cover a wide range of income-producing properties:
- Single-family rentals (best rates)
- 2–4 unit multifamily properties
- 5+ unit multifamily (select lenders)
- Condos and townhomes (warrantable and non-warrantable)
- Short-term rentals (Airbnb, VRBO) — some lenders accept projected STR income
- Mixed-use properties (select lenders)
The property must be non-owner-occupied. DSCR loans are for investment properties only — not your primary residence.
How is rental income verified for a DSCR loan?
Lenders verify rental income using one or more of the following:
- Existing lease agreements — if the property is already rented, the current lease is used
- Appraiser’s market rent analysis — the appraiser provides a comparable rent estimate based on similar properties in the area
- Short-term rental income projections — for Airbnb/VRBO properties, some lenders accept income data from platforms like AirDNA or the property’s booking history
For new purchases without a lease in place, the appraiser’s rent analysis is the most common method. We ensure the right rent data is presented to maximize your DSCR ratio.
Can I use a DSCR loan to buy property in an LLC?
Yes — this is one of the biggest advantages of DSCR loans. You can close in the name of an LLC, corporation, or other business entity, which provides liability protection and simplifies your portfolio management. Most conventional loans require individual borrowers, but DSCR loans are specifically built for investors who operate through entities. We help investors structure their entity ownership to qualify.
How fast can a DSCR loan close?
Because there’s no income verification to process, DSCR loans close significantly faster than conventional investment loans — typically in 14–21 days compared to 45+ days for conventional. Less documentation means less back-and-forth with underwriting. In competitive markets like Sacramento, this speed can be the difference between winning and losing a deal.
Can I do a cash-out refinance with a DSCR loan?
Yes. DSCR cash-out refinances allow you to pull equity from an investment property to fund your next acquisition, make renovations, or consolidate debt. Maximum LTV for cash-out is typically 70–75%, depending on DSCR ratio and credit score. You’ll generally need at least 6 months of ownership (seasoning) before a cash-out refinance. We use this strategy regularly to help investors recycle capital and scale their portfolios.
What is a prepayment penalty on a DSCR loan?
Most DSCR loans include a prepayment penalty — typically a declining structure over 3–5 years. A common structure is 5/4/3/2/1, meaning you’d pay 5% of the balance if you pay off in year one, 4% in year two, and so on. Shorter or no prepayment penalty options are available but come with a higher interest rate. We explain every prepayment scenario upfront so you can choose the structure that aligns with your investment strategy.
What if my DSCR is below 1.0 — can I still qualify?
Yes, with the right lender. Some lenders finance properties with a DSCR as low as 0.75, meaning the rent covers 75% of the mortgage payment. These deals typically require higher credit scores (680+), larger down payments (25–30%), and 12 months of cash reserves. This is common in high-appreciation markets where rents haven’t caught up to property values yet, or with value-add properties where rents will increase after renovations. We identify which lenders fit sub-1.0 scenarios and structure the deal accordingly.
How does a DSCR loan compare to a conventional investment loan?
| Feature | DSCR Loan | Conventional Investment Loan |
|---|---|---|
| Income Docs | None — rental income only | Full W-2s, tax returns, pay stubs |
| Property Limit | No limit | 10-property cap |
| Entity Vesting | LLC, Corp, Trust — yes | Individual only |
| Down Payment | 15–25% | 15–25% |
| Interest Rates | 6–8% (2026 range) | 6.5–7.5% (2026 range) |
| Closing Speed | 14–21 days | 45+ days |
| Prepayment Penalty | Typically yes (3–5 years) | None |
| DTI Required | Not applicable | Yes — 45–50% max |
Can I use a DSCR loan for a short-term rental (Airbnb)?
Yes. Many DSCR lenders now accept short-term rental income from platforms like Airbnb and VRBO. Income can be verified using the property’s booking history, a third-party market analysis from AirDNA, or in some cases, a 1007 rent schedule from the appraiser. Keep in mind that not all lenders accept STR income, and some apply a discount factor to projected revenue to account for seasonality. We know which lenders work best for STR deals in the Sacramento region.
Does MAC Real Estate offer DSCR loans in the Sacramento area?
Absolutely. We actively originate DSCR loans across Rocklin, Roseville, Sacramento, Lincoln, Elk Grove, Folsom, and throughout Placer and Sacramento Counties. Whether you’re purchasing a single-family rental in Whitney Ranch or a duplex in Midtown Sacramento, we match your deal with the best DSCR lender from our wholesale network. As a broker, we’re not limited to one lender’s program — we shop the deal to find you the best rate, the right LTV, and the fastest close.
Ready to Explore Your Options?
Whether it’s a DSCR loan for your next investment or a 2nd lien to unlock your equity, we’ll find the right fit.
MAC Real Estate Services | Rocklin, California
25 Years of Mortgage Expertise | NMLS Licensed
“No call centers. No runaround. Just answers.”