Debt Service Coverage Ratio (DSCR)
Bottom Line Up Front (BLUF): In residential 1–4 unit wholesale lending, DSCR is calculated as Gross Monthly Rent (from an executed lease or appraiser Form 1007) divided by monthly PITIA (Principal, Interest, Taxes, Insurance, and HOA/Association dues). A 1.00x DSCR means property rent covers 100% of the monthly payment without relying on personal W-2 income or tax returns.
Underwriting Formula / Rule
DSCR = Gross Monthly Qualifying Rent ÷ Monthly PITIA (Principal + Interest + Taxes + Insurance + HOA)
Wholesale Shelf Benchmark
1.00x–1.25x+ for up to 80% LTV; 0.75x–0.99x on dedicated Sub-1.00x / Low-DSCR wholesale shelves.
Frequently Asked Underwriting Questions
Do DSCR loans require personal tax returns or W-2s?
No. Business-purpose DSCR loans qualify the property based on its rental cash flow and the guarantor’s credit and liquid reserves rather than personal debt-to-income (DTI).
What is a good DSCR ratio for 80% LTV?
Most institutional wholesale shelves unlock maximum 80% LTV purchase leverage at a 1.15x to 1.25x+ DSCR and 700+ FICO.
Arranged by Loan Daddy LLC (NMLS #2827624 · (480) 485-1229 · quotes@loandaddy.ai). Business-purpose investment properties only.