DSCR loans — from FHA house-hack to rental portfolio.
FHA's 3.5%-down duplex got you started. A DSCR loan buys property #2 on its own rent — no tax returns, ~20–25% down, no 10-property cap. Lending in 32 states and DC from Las Vegas.
Which terms matter before you compare?
DSCR comparisons start with a few simple definitions. These are the words people most often ask us to explain before they choose a path.
- MIP
- Mortgage insurance premium. FHA mortgage insurance can affect both cash to close and monthly payment.
- DTI
- Debt-to-income ratio. It compares monthly debts to gross monthly income before taxes.
- Cash to close
- The total money needed at closing, including down payment, closing costs, prepaids, and escrow deposits.
- Escrow
- An account used to collect and pay items like property taxes and homeowners insurance with the mortgage payment.
This is general education, not a final approval or binding quote. The right answer comes from a full mortgage review with your actual details.
Quick answer — An FHA loan must be owner-occupied, so once you outgrow your FHA house-hack you buy the next rental with a DSCR loan. It qualifies on the property's rent — not your income — with no tax returns. Rent ÷ payment (PITIA) is the DSCR; 1.0+ means the rent covers the loan.
Reviewed by Vatche Saatdjian · Las Vegas mortgage expert since 2004 · NMLS #69363
How does a DSCR loan work, in three moves?
DSCR stands for debt-service coverage ratio. In plain terms, a DSCR loan is a rental property loan that lets the property's own cash flow do the qualifying instead of your personal income -- a common next step once an FHA-financed house-hack turns into a true rental. Here's the whole path.
"The Federal Housing Administration (FHA) - which is part of HUD - insures the loan, so your lender can offer you a better deal."U.S. Department of Housing and Urban Development -- hud.gov
Run the numbers
Divide the property's monthly rent by its full payment (PITIA). That ratio is your DSCR — 1.0 means the rent covers the loan.
Qualify on the property
No tax returns, W-2s, or pay stubs — it's a business-purpose loan. Plan on ~20–25% down and roughly 620+ credit.
Close & scale
Fund in an LLC for privacy and protection — then do it again. DSCR programs generally have no cap on financed properties.
How fast can you estimate your DSCR? Seconds.
DSCR is quick to estimate: enter the rent and the payment — we'll show the ratio, the zone, and what it means.
Estimate only, based on the figures you enter. Not a rate quote, pre-approval, or commitment to lend. Actual DSCR, rates, terms, and eligibility are determined by the lender and subject to underwriting.
What are DSCR requirements, in plain terms?
DSCR guidelines vary by lender and are subject to underwriting — here's the typical shape of a file. For the statewide detail, see DSCR loan requirements in Nevada. Before you plan around it, read what FHA actually requires you to occupy.
- DSCR target: 1.0 can fund · 1.25+ earns the best pricing · a no-ratio option exists below 1.0.
- Down payment: ~20–25% (sometimes 15% at strong DSCR + credit); LTV commonly to 75–80%.
- Credit: roughly 620–680+ FICO floor; better pricing as the score rises.
- Property: non-owner-occupied 1–4 unit, plus many condos, 5–8 unit, and short-term rentals.
- Reserves: typically about 6 months of payments (varies by program).
- Vesting: commonly close in an LLC for asset protection and privacy — which is exactly what an FHA loan does not permit.
- Your FHA stays put — DSCR is a separate, business-purpose loan on the next property.
Income docs aren't required because DSCR loans are business-purpose investment loans — generally exempt from the consumer ATR/QM rule under Reg Z (12 CFR 1026.3(a)).
Why use DSCR loans for building a portfolio?
No income docs
No tax returns, W-2s, or pay stubs. Underwritten to the property's rent — ideal for self-employed and 1099 investors.
Keep your FHA
Your FHA loan stays put — a DSCR loan is a separate, business-purpose loan for the next property.
No 10-property cap
Conventional financing caps you at 10 financed properties (Fannie Mae). DSCR programs generally don't — scale the portfolio.
Two ways to finance a rental.
Illustrative comparison — terms vary by lender and are subject to underwriting. The full side-by-side is in DSCR vs conventional investment loans in Nevada.
| Factor | DSCR loan | Conventional investor loan |
|---|---|---|
| Qualifies on | The property's rent (DSCR = rent ÷ PITIA) | Your personal income + DTI |
| Income docs | None — business-purpose | 2 yrs returns, W-2s/1099s, pay stubs |
| Typical down | ~20–25% (sometimes 15%) | ~15–25% for investment property |
| Financed-property cap | Generally none — scale a portfolio | 10 financed properties max (Fannie Mae) |
| LLC vesting | Commonly allowed | Generally must close in your name |
| Short-term rental | Often allowed (varies) | Restricted / case-by-case |
| Rate posture | Higher; prepay penalty common | Lower; no prepay penalty |
| Best for | Self-employed; portfolio scaling | W-2 buyers under 10 properties |
| FHA note | Buys pure rentals (FHA can't) | FHA = owner-occupied, 3.5% down on-ramp |
Sources: Fannie Mae Selling Guide B2-2-03 (10-property limit); CFPB / Reg Z 12 CFR 1026.3(a) (business-purpose exemption). As of 2026.
House-hack → portfolio.
FHA gets you in the door; DSCR builds the portfolio.
Important: an FHA loan is owner-occupied (a 2–4 unit house-hack counts because you live in a unit). The first step is covered in buying a 2-4 unit with 3.5% down; for a pure rental after that, a DSCR loan is the graduation step. Based in Las Vegas, lending in 32 states and DC.
DSCR loans, answered.
Start with how DSCR loans work, see the Las Vegas investor guide or, for veterans, DSCR for veteran investors. Insure the rental with landlord coverage.
Read what buyers say.
Customer experiences may vary. Reviews do not guarantee loan approval, rates, terms, or outcomes.
Run the numbers on your property.
DSCR pricing starts with the property: tell us about it and we will come back with a clear read on the DSCR and what it would take to finance it. Business-purpose investment loans only — these are not for a home you intend to live in.
Outgrow the house-hack.
See if I qualify.
From FHA house-hack to your next rental — qualify on the property's rent, close in an LLC, no property cap.