Bonus: DSCR Loans Explained (Finance Rentals Without Tax Returns, Bank Statements, Or Pay Stubs)
Rental Income Podcast With Dan Lane
Rental Income Podcast
4.8 • 836 Ratings
🗓️ 10 July 2025
⏱️ 15 minutes
🧾️ Download transcript
Summary
- No tax returns.
- No pay stubs.
- No bank statements.
Instead, the loan is based on the income the property will generate. Caeli walks us through real examples of what kind of purchase price and rent numbers make a deal work, how lenders determine expected rent, and what kind of down payment you'll need. We also cover:
- The types of properties that qualify
- How DSCR loan rates compare to traditional financing
- Prepayment penalties to watch out for
- Whether cash-out refis are possible with this loan type
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Transcript
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| 0:00.0 | This is a bonus episode of the rental income podcast. And now, Dan Lay. |
| 0:08.0 | There's a ton of different ways to finance a rental property. And one of the newer loan types is a |
| 0:13.6 | DSCR loan. And it's come up a few times over the last few episodes. And I thought it might be an |
| 0:19.5 | interesting bonus episode today to look at a |
| 0:22.4 | DSCR loan and figure out exactly how it works. So, Shaley, can you explain to us what is a DSCR loan? |
| 0:30.6 | I would be very happy to. So let's start with what the abbreviation stands for. DSCR is debt service coverage ratio. |
| 0:40.6 | And simply said, everybody, this is just a way of qualifying a loan using the income of the |
| 0:47.2 | property only divided by the new mortgage payment that you're securing and coming up with a |
| 0:53.5 | ratio. |
| 0:54.1 | It's as simple as that. |
| 0:55.0 | It's a very, very easy calculation by taking gross rents and dividing it by the proposed |
| 1:00.5 | principal interest, taxes, insurance, and HOA, if applicable. The lender isn't going to want to |
| 1:07.0 | see your tax returns, your pay stubs, your bank statements. They don't care |
| 1:11.1 | if you're self-employed or how long you've been at your job for. They're just going to look |
| 1:15.6 | at the rental property and see if it makes sense. And on the show today, Chaley is going to |
| 1:21.1 | break down the DSCR loan and tell you everything you need to know. Joining us on the show today |
| 1:27.0 | is Chaley Ridge. |
| 1:28.5 | I want to let you know about a really easy way to track your rental income and expenses. |
| 1:34.1 | It's an accounting software custom made for rental property investors. |
| 1:38.7 | It takes just seconds to enter an expense or to record that you collected rent. |
| 1:43.4 | It makes tax time really easy. |
| 1:45.7 | Just run a report and give it to your tax person and you are done. |
... |
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