DSCR Loans Explained: How Qualification Actually Works

Published July 2026 · By the SLA Capital team

A DSCR loan is one of the few investor mortgages that doesn't care about your job. It cares about the property's job — earning rent. That single shift is why full-time real estate investors, LLC-title buyers, and anyone with complicated tax returns keep coming back to DSCR for their rental portfolio.

Here's how DSCR qualification actually works, in the order underwriting looks at it.

The ratio: rent divided by PITIA

DSCR stands for Debt Service Coverage Ratio. The formula is straightforward:

DSCR = Rent ÷ PITIA

Rent is the monthly income the property produces. For long-term rentals we use the lower of the market rent from the appraisal (1007 form) or the actual lease. Short-term-rental income is possible in select markets with a 12-month history.

PITIA is the full monthly housing payment: Principal + Interest + Taxes + Insurance + Association dues (HOA). If the property has no HOA, drop the A.

A DSCR of 1.0 means rent exactly covers PITIA. 1.25 means the property throws off 25% more than the payment. 0.85 means the rent falls 15% short — a common "Below 1.0" scenario that many lenders reject but that we can still close.

What "qualifies" actually means

Most DSCR programs require a 1.0 minimum ratio. If your deal breathes even on paper, you're in. SLA Capital's program starts at 1.0 and offers a Below 1.0 lane that trades a slight rate buy-up or additional reserves for a lower coverage minimum. This is common on brand-new lease-ups where market rent hasn't hit the pro forma yet.

Beyond the ratio, we look at four things:

• Credit score. 660 minimum, better pricing above 700 and 740.
• Property. Non-warrantable condos, mixed-use, rural — the harder ones need a conversation, not a blanket "no."
• Reserves. Six months of PITIA in the borrower's name at close is standard; twelve if you're stacking multiple loans at once.
• Experience. First-time investors qualify. Repeat borrowers price better.

You'll notice nothing on that list is your W-2 income, your DTI, or your last two years of tax returns. That's the entire point.

LLC-title is standard, not exotic

DSCR loans are business-purpose loans, which means the loan must close in a legal entity — an LLC, a corporation, or a partnership. Most of our borrowers close in an LLC for asset protection and to keep the debt off their personal credit file. The guarantors (usually you) still sign personally, but the borrower on the note is the entity.

If you don't have an LLC yet, form it before close — takes 24 hours in most states.

How SLA Capital's DSCR program is priced

Rates start at 5.75% on a 30-year fixed, priced off the 5-year Treasury. We also offer 5/1 ARM, 7/1 ARM, and 5-year interest-only structures — pick the one that matches your hold plan. Leverage runs up to 80% LTV on purchase and rate-and-term refi, and up to 75% LTV on cash-out. Origination is one point standard. There are no junk fees.

The rate you're quoted through our sizer is the rate you close at. We don't move it at the closing table.

How to know if your deal will qualify — in two minutes

Take your monthly rent, divide it by your estimated PITIA. If it's 1.0 or higher, you're in the standard lane. If it's between 0.85 and 1.0, you're in the Below-1.0 lane. If it's below 0.85, we should talk about a rate buy-up or a different structure entirely.

Or skip the math — send us the address. Our sizer returns a real term sheet in under two minutes.