Borrower Profile
DSCR loans for lower-FICO investors
In short
DSCR loans are FICO-tiered like any other mortgage product, but the floor is well below conventional. Most DSCR programs start at 620 FICO. Some lenders go to 600 with higher reserves and lower LTV. Below 600 is rare but not impossible if you have substantial liquid reserves. Rate premium increases at each tier as FICO decreases.
Program highlights
- 620 FICO: standard DSCR programs, up to 75% LTV purchase
- 600-619 FICO: specialty programs available, max LTV usually 70%
- Below 600 FICO: case-by-case with major reserves (12+ months PITI)
- No FICO at all (foreign national / ITIN-only): substitute with reserves and foreign credit references
- Higher reserves can offset lower FICO at some lenders (a "compensating factor" approach)
Who this fits
- Your FICO is 600-660 due to past credit hiccup that no longer reflects your situation
- You have substantial reserves to compensate (12+ months PITI in liquid accounts)
- You're willing to accept a rate premium proportional to FICO
- You can document the property's DSCR is solidly above 1.0 (extra DSCR ratio is another compensating factor)
How the process differs
Same DSCR mechanics. The credit profile drives program selection: 660+ gets standard pricing, 620-660 gets a 0.125%-0.25% rate premium, sub-620 gets routed to specialty programs with 0.50%+ rate premiums and tighter terms. Reserves and DSCR ratio above the program floor partially offset the FICO hit.
What to watch for
- Recent derogatory credit events (foreclosure, bankruptcy, 30+ day mortgage lates within 12 months) can disqualify even at otherwise-acceptable FICO. The lender asks about specifics.
- A FICO bump of 20-40 points often opens substantially better pricing tiers. Sometimes worth waiting 3-6 months and paying down credit card balances to get below 30% utilization before applying.
- Sub-620 borrowers should plan to refinance in 12-18 months once credit recovers and rate-saving is possible.
- Foreign nationals with no US FICO at all use a separate program path - reserves and foreign credit references replace the FICO score entirely.
Frequently asked
Can I get a DSCR loan with a recent foreclosure?+
Most programs require 2-4 years seasoning from a foreclosure. Some specialty programs accept 12-month seasoning with documented circumstances.
What about recent bankruptcy?+
Chapter 7: typically 2-4 years from discharge. Chapter 13: 1-2 years from discharge or 24 months on a structured payment plan.
My FICO is 580 - any options?+
Honestly tough. Some hard-money or private lenders go below 580 but pricing is closer to 10%+ on rate. The path is usually to fix FICO first (pay down balances, clear collections) and try DSCR in 6-12 months.
Will the lender pull a hard credit pull?+
Yes, at application. Soft pull happens at scenario quote. We don't do hard pull until you elect to apply.
Does my rate change if my FICO drops between application and close?+
Yes if it drops below the threshold for the priced rate tier. Avoid opening new credit accounts during the 30-45 days from application to close.
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