DSCR
DSCR loans qualify investment properties based on the subject property's cash flow rather than the borrower's personal income or employment. There is no DTI calculation — only the property's rental income relative to its debt obligations determines eligibility.
What Is a DSCR Loan
"DSCR transactions are business-purpose loans designed for experienced real estate investors. Unlike traditional mortgage products, qualification is based on the cash-flow potential of the subject property rather than the borrower's personal income or employment history."
"Loan has no DTI, only DSCR is used for eligibility."
DSCR Formula
- Fully amortizing: DSCR = Monthly Gross Rental Income / PITIA
- Interest-only: DSCR = Monthly Gross Rental Income / ITIA
"The Debt Service Coverage Ratio is calculated by dividing the Qualifying Monthly Gross Rent by the property's monthly debt obligations (PITIA or ITIA for interest-only transactions)."
"Debt-Service Coverage Ratio = Gross Income / Proposed PITIA (or ITIA for interest-only loans)."
Example (JMAC Lending Venice DSCR): Monthly PITIA = $650 / Estimated Monthly Market Rent = $850 / DSCR = $850 / $650 = 1.30
IO note: "DSCR loans shall utilize the Interest-Only (IO) payment to determine the Debt Service Coverage Ratio, provided the loan is structured with an interest-only period." Typical IO overlays: minimum FICO 660–700, max LTV reduced by 5%.
Minimum DSCR by Lender / Program
| Lender / Program | Minimum DSCR |
|---|---|
| Greenbox Elite DSCR | 0.75x (below 1.00x triggers LTV restrictions) |
| Greenbox Elite Plus DSCR | 1.00x |
| Greenbox FN/ITIN DSCR | 0.75x |
| Greenbox 5-8 Unit DSCR | 1.00x |
| Mega Capital Expanded DSCR | 0.75 |
| JMAC Newport DSCR | No minimum (No Ratio eligible) |
| JMAC Venice DSCR | No minimum (No Ratio eligible) |
| JMAC Prime DSCR | >= 1.00 |
| Forward Lending Sub1 DSCR | >= 0.75 and < 1.0 |
| Forward Lending Select DSCR | 1.25 ratio tier |
Rental Income Documentation
Long-Term Rental (LTR)
- Purchase: FNMA Form 1007 (SFR) or 1025 (2-4 Units) reflecting market rent. If tenant-occupied, use the lower of market rent (appraisal) or actual lease rent.
- Refinance: FNMA Form 1007 or 1025 plus a current lease agreement.
"Purchase: FNMA 1007 or 1025 reflecting market rent...Use lower of estimate market rent on appraisal or a current rent. Refinance: FNMA 1007 or 1025, and a current lease agreement."
"100% of long-term rental value will be used for qualification purposes. Leases that have been converted to month-to-month are allowed."
- Higher actual rent: If actual rent exceeds the 1007/1025 market rent, most lenders allow its use only with 2 months of documented receipt, typically capped at 120% of the market rent estimate.
Short-Term Rental (STR) — Airbnb / VRBO
- 12-month average of rental income required to account for seasonality.
- 20% expense haircut applied: qualifying income = Gross Rents x 80%.
- "Gross rents reduced by 20% to reflect extraordinary costs (i.e., advertising, furnishings, cleaning)... (Gross Rents * .80) divided by Starting Payment = DSCR."
- LTV restrictions apply — typically max 75% LTV purchase, 70% refinance.
- AirDNA Rentalizer acceptable for purchase transactions on many programs; minimum market score of 60 typically required.
- STR NOT permitted on: JMAC Prime DSCR, Greenbox 5-8 Unit DSCR, and JMAC Venice 5-8 Units/Mixed Use.
LTV Grids (Selected Lenders)
Greenbox Elite DSCR (1-4 Units)
| FICO | DSCR >= 1.00x Purchase | DSCR 0.75–0.99x Purchase |
|---|---|---|
| 720 | 85% | 75% |
| 700 | 80% | 75% |
| 680 | 75% | 70% |
| 660 | 75% | N/A |
| 640 | 75% | N/A |
Loan amounts $150K–$1MM; higher loan amounts step down further.
Greenbox Elite Plus DSCR (requires DSCR >= 1.00x)
| FICO | Purchase | R/T Refi | C/O Refi |
|---|---|---|---|
| 720 | 80% | 75% | 75% |
| 700 | 80% | 75% | 75% |
| 680 | 75% | 70% | 70% |
| 660 | 70% | 70% | 65% |
Greenbox FN/ITIN DSCR
| Loan Amount | FN DSCR >= 1.00x Purchase | ITIN DSCR >= 1.00x Purchase |
|---|---|---|
| $150K–$750K | 75% | 70% |
| $750K–$1MM | 75% | — |
| $1MM–$1.5MM | 75% | — |
| $1.5MM–$2MM | 70% | — |
| $2MM–$2.5MM | 65% | — |
Greenbox 5-8 Unit DSCR (DSCR >= 1.00x only)
| Loan Amount | FICO | Purchase | R/T Refi | C/O Refi |
|---|---|---|---|---|
| $500K–$1.5MM | 720 | 70% | 60% | 60% |
| $1.5MM–$2MM | 720 | 65% | 55% | N/A |
Occupancy & Borrower Eligibility
- All DSCR programs are investment property only. Borrower and immediate family are strictly prohibited from occupying the subject property.
- Certification of Business Purpose required on all transactions.
Investor Experience
- Experienced investor: History of owning and managing non-owner-occupied residential or commercial real estate for at least 1 year in the last 3 years.
- First-time investor: "First time investor is a borrower not meeting the experienced investor definition of having a history of owning and managing commercial or non-owner occupied residential real estate for at least 1 year in the last 3 years." Eligible on select programs with restrictions: minimum 700 FICO, DSCR > 1.00, 1-unit SFR only, no prior mortgage lates (0x30x36), 36-month seasoning from any credit event.
Credit Requirements
| Item | Typical Requirement |
|---|---|
| Minimum FICO | 620 (JMAC Newport) to 660–680 depending on program/tier |
| Housing History | 0x30x12 generally required; 1x30x12 may trigger LTV reductions |
| Credit Event Seasoning | 2–4 years from BK/FC/SS/DIL depending on program |
| Tradelines | 2 tradelines reporting 24+ months OR 3 reporting 12+ months |
"BK/FC/SS/DIL: >= 36 Months: No reduction; >= 24 Months: Purchase Max 75% LTV | R/T and Cash-Out 70% LTV."
Reserves
| Loan Amount | Typical Requirement |
|---|---|
| <= $1.0MM–$1.5MM | 2–3 months PITIA (varies by lender) |
| > $1.5MM | 6 months PITIA |
| > $2.5MM | 9–12 months PITIA |
"LAMT <= $1.5mm: 2 months; LAMT > $1.5mm: 6 months; LAMT > $2.5mm: 12 months; LTV > 80%: 6 months."
Cash-out proceeds may typically be used to satisfy reserve requirements.
Asset Utilization to Boost DSCR
Some programs allow supplementing rental income with an asset utilization figure (liquid assets / 60 months) to push DSCR above minimum thresholds.
"Asset Utilization is eligible to be used to boost the gross rental income...Divide over 60 months | No minimum assets | exclude Short Term Rental | ITIN borrower not allow."
Example (JMAC Newport): $120K liquid assets / 60 = $2,000/month. ($5,000 rent + $2,000 asset income) / $6,000 PITIA = 1.16 DSCR.
JMAC Program Comparison
| Feature | Newport DSCR | Venice DSCR | Prime DSCR |
|---|---|---|---|
| Min DSCR | No Minimum | No Minimum | >= 1.00 |
| Min FICO | 620 | 640 | 640 |
| Max Loan Amount | $3.0MM | $3.5MM | $2.0MM |
| STR Income | Allowed | Allowed | Not Allowed |
| ITIN | Allowed | Allowed | Not Allowed |
| Foreign National | Allowed | Allowed | Not Allowed |
| Asset Utilization | Allowed | N/A | N/A |
| Max LTV | Up to 80% | Up to 80% | Up to 80% |
Eligible Property Types
- Generally eligible: SFR, PUD, Warrantable Condo, 2-4 Units. Select programs extend to 5-8 Units, Mixed Use, Condo Hotels, Non-Warrantable Condos (with restrictions).
- Generally ineligible: Manufactured homes, log homes, cooperatives, agricultural properties, boarding houses, properties with zoning violations, condotels on select programs, Hawaii Lava Zones 1-2.
