As more borrowers turn to real estate investing, non-QM loans like DSCR are gaining traction. But many brokers and loan officers still don’t fully understand how these loans work—or how easy they can be to offer with the right platform.
This guide breaks down everything you need to know about DSCR loans, who they’re for, and how Morty makes it easy to add them to your product set.
What Is a DSCR Loan?
A DSCR loan—short for Debt Service Coverage Ratio—is a type of non-QM mortgage designed specifically for real estate investors. Unlike traditional loans, DSCR loans don’t require borrowers to document their personal income. Instead, they qualify based on the cash flow of the investment property.
DSCR = Gross Monthly Rent / Monthly PITIA
(PITIA = Principal, Interest, Taxes, Insurance, and any Association dues)
This means lenders divide the rental income a property generates by its monthly housing expenses. The resulting ratio reflects the property’s ability to “cover” the debt.
Most lenders require a DSCR of 1.0 to 1.25, meaning the property must earn at least enough rent to cover the mortgage. For example, if you have a rental income of $3,500 and your monthly PITIA is $2,800, your DSCR is $3,500 ÷ $2,800 = 1.25. This means the rental income is 25% greater than the monthly obligation—a strong ratio that indicates positive cash flow.
The benefit? No W-2s, no pay stubs, no tax returns—just a solid property and steady rental income.
Who Are DSCR Loans For?
DSCR loans are ideal for:
- Real estate investors who own or are purchasing rental properties—typically single-family or 2–4 unit residential homes held for investment
- LLC or entity borrowers, meaning individuals financing properties under a business structure rather than personally
- Self-employed borrowers with complex or non-traditional income
- Landlords building a portfolio who want to scale without income documentation hurdles
Many of these borrowers might not qualify for conventional loans due to inconsistent income, too many properties financed, or a desire to borrow using a business entity rather than as an individual. DSCR loans help fill that gap.
Example: The Investor Expanding Their Portfolio
Borrower: Jamal, an experienced landlord with five rental units in two states
Scenario: Jamal is purchasing a new 4-unit property through his LLC. The property generates $3,500/month in rent and the total PITIA is $2,800
DSCR: 3,500 / 2,800 = 1.25
Matched with: DSCR loan
Why it’s a good fit: No personal income docs required, and he can finance under his LLC using just the property’s cash flow.
Benefits of DSCR Loans for Brokers
Offering DSCR loans helps brokers:
- Serve high-opportunity markets—real estate investors are a growing segment and often finance multiple properties at once
- Stand out with non-traditional offerings that retail lenders often can’t match
- Streamline pre-qualification—no need for tax returns, pay stubs, or employment verifications
- Reduce friction in processing with simplified documentation
- Build long-term pipelines with repeat investor clients who return regularly for new financing
- Boost margins with products that often carry higher compensation and less competition
DSCR is a natural complement to other non-QM offerings like bank statement loans, interest-only mortgages, and reverse mortgages.
How Morty Makes DSCR Lending Easier
Morty gives you everything you need to confidently offer DSCR loans:
- Investor-friendly POS: Our Point-of-Sale intake is built to handle rental property inputs, LLC ownership, and asset-based qualification.
- Wide lender network: Our lender network includes non-QM lenders who specialize in DSCR.
- Fulfillment built for speed: Our processing & fulfillment team knows DSCR documentation inside and out and helps get the deal closed quickly.
- Fast closings: We’ve supported DSCR deals that closed in under 3 weeks—even for investors with complex portfolios.
Spotlight Technology: Rosey AI for DSCR Loans
Morty’s Rosey AI helps you get answers fast on DSCR qualification, required docs, or borrower fit. Whether you’re comparing loan scenarios or checking max LTV for a lender, Rosey helps you get answers fast—so you’re not waiting on support or risking a missed deal.
FAQs: Common DSCR Questions
Does the borrower need to live in the property?
No. DSCR loans are only for non-owner-occupied investment properties.
Can a borrower get a DSCR loan through a traditional lender?
Typically, no. Retail lenders don’t offer DSCR loans—brokers have access to these products through wholesale channels.
What documents are typically required?
Leases, rent rolls, and appraisals (often with rental comps). No income verification or tax returns needed.
How fast can a DSCR loan close?
Some close in under 3 weeks, especially with Morty’s streamlined tech and fulfillment support.
Ready to Offer DSCR Loans?
DSCR loans let you support real estate investors with high-leverage, low-friction financing. Morty gives you the tools, lender access, and operational support to originate with confidence—and win repeat business.
→ Talk to Sales to get started.
