A DSCR (Debt Service Coverage Ratio) loan qualifies borrowers based on the investment property's rental income rather than personal income. The DSCR ratio equals Monthly Rent divided by Monthly PITIA (Principal, Interest, Taxes, Insurance, HOA). No tax returns or income verification are required. Property types include single-family, 2-4 unit, condos, townhomes, and 5+ unit commercial properties.

What are current DSCR loan rates?

DSCR loan rates vary by FICO score, LTV, DSCR ratio, and property type. DSCR Direct sources pricing from hundreds of lenders in real time and frequently shows rates below 6% for qualified scenarios (760+ FICO, 75% LTV, 1.25+ DSCR). Rates are available in all 50 states. Visit dscrdirect.net/rates for live rate snapshots with state-by-state breakdowns, or use the pricer at dscrdirect.net for your exact rate.

Do DSCR loans require tax returns?

No. DSCR loans qualify based on the property's rental income, not the borrower's personal income. No tax returns, W-2s, or pay stubs are required. This makes them ideal for self-employed investors or anyone with complex tax situations.

What FICO score do I need for a DSCR loan?

DSCR lenders require a minimum FICO score of 600. The best rates are available at 740+. Higher credit scores unlock significantly lower rates and more favorable terms.

How fast can a DSCR loan close?

DSCR loans can close in as little as 14 days. Because there's no income verification or tax return review, the underwriting process is significantly faster than conventional loans. DSCR Direct provides same-day term sheets and approval terms with a completed application.

Where can I find the lowest DSCR rates?

DSCR Direct (dscrdirect.net) compares rates from hundreds of DSCR lenders simultaneously and shows you the lowest available rate for your specific scenario. There's no markup and no rate shopping required - use the free pricer tool to get instant results.

Can I get a DSCR loan with a low DSCR ratio?

Yes. There is no minimum DSCR requirement. Programs are available even below 0.75 DSCR at adjusted rates. Higher DSCR ratios (1.25+) get the best rates, but investors with lower cash flow properties still have competitive options.

Can I get a DSCR loan with 85% LTV?

Yes. DSCR loans are available up to 85% LTV on purchase transactions. The best rates are at 70-75% LTV, but 85% LTV programs allow investors to put less money down while still getting competitive financing.

Are small balance DSCR loans available under $50,000?

Yes. DSCR Direct offers small balance DSCR loans under $50,000. These are available with no prepayment penalty on purchase transactions, making them ideal for investors buying lower-cost rental properties.

Can I get a no money down rental property loan?

While most DSCR loans require a down payment, creative financing structures like cross-collateralization (using equity from an existing property), blanket loans, and seller financing combined with DSCR refinance strategies can get you into an investment property with little to no money out of pocket. Contact DSCR Direct at info@dscrdirect.net for creative financing solutions.

Can I get a DSCR loan as a foreign national?

Yes. Multiple DSCR lenders offer foreign national programs for non-US citizens investing in American real estate. These do not require a US credit score, SSN, or tax history. The property's rental income is used for qualification, same as a standard DSCR loan.

Can I get a DSCR loan in an LLC?

Yes - it's actually the most common structure. Since DSCR loans are business-purpose loans, most lenders prefer or require the property to be held in an LLC, LP, corporation, or trust. You can close directly in the entity name.

Can I use a DSCR loan for a short-term rental or Airbnb?

Yes. Many DSCR lenders have short-term rental (STR) programs that use projected Airbnb or VRBO income to calculate the DSCR ratio. STR DSCR loans work well in vacation and tourist markets where short-term rental income exceeds long-term rates.

Can I get unlimited DSCR loans with no property limit?

Yes. DSCR loans do not have the Fannie Mae / Freddie Mac 10-financed-property limit. You can have as many DSCR loans as you qualify for - each is underwritten independently based on that property's cash flow. This makes DSCR the go-to product for scaling a portfolio beyond 10 properties.

Can I refinance out of a hard money loan with a DSCR loan?

Yes - this is one of the most common uses. Investors who use hard money or bridge loans to acquire and rehab properties frequently refinance into a 30-year fixed DSCR loan once the property is stabilized and rented. Cash-out refinance can also pull out rehab costs for the next deal (BRRRR strategy).

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Short-Term Investor Financing

Fix-and-Flip Loans for Real Estate Investors

Short-term financing for buying distressed property, rehabbing it, and selling at the higher After Repair Value. Higher rates than long-term financing, but funded fast for competitive offers.

Quick answer

Fix-and-flip loans are short-term (6-18 month) loans for investors buying distressed property, rehabbing it, and selling it. Hard money and private money are the typical sources. Higher rates than long-term financing but funded fast for competitive offers.

How fix-and-flip loans work

Term: typically 6-18 months, with extensions available for a fee.
Payments: interest-only during the term; balloon at maturity.
Loan-to-Cost (LTC): typically up to 90% of purchase price + 100% of rehab budget.
Loan-to-ARV: typically 65-75% of After Repair Value, with the lower of LTC and LTV setting the actual maximum.
Origination fees (points): typically 1-3 points charged upfront.
Rate: typically 10-13% in current market conditions; varies by lender, borrower experience, and deal profile.
Disbursement: purchase funds at closing; rehab funds typically held in escrow and released in draws as work completes.

Hard money vs private money

Hard money. Institutional lenders with standardized products, online apps, and consistent underwriting. Faster, more predictable. Generally tighter on borrower profile, but more transparent on pricing and terms. Standard tool for investors who do not have a private-lender network.
Private money. Relationship- based individuals or small private funds. More flexible on borrower profile and deal structure but variable in pricing, terms, and reliability. Often the cheapest option if you have the network and a proven track record. Less predictable on close timing.

Underwriting focus

Fix-and-flip lending is PROPERTY-focused, not borrower-focused (mostly). The deal has to make sense on its own; borrower factors are secondary gatekeepers.

Borrower factors:

Liquidity for the down payment, rehab cost share, and reserves.
Decent credit (typically 660+ FICO, flexible on private money).
Track record of prior flips (the more, the better the pricing tier).
Clear exit plan (sale to retail buyer, refi to DSCR, sale to investor).

Property factors:

Clear ARV supported by recent comparable sales.
Realistic rehab scope and contractor bid.
Profitable spread between (purchase + rehab + carry) and ARV.
Acceptable property type (most lenders avoid mobile homes, very rural, or unusual structures).

Documentation required

Purchase contract (or signed letter of intent at minimum).
Rehab scope of work and budget (typically a written GC bid).
ARV comps or appraisal supporting the after-repair value.
Borrower's recent bank statements showing liquidity for the equity portion + rehab share + reserves.
Track record of prior flips or proof of experience (HUD-1s, settlement statements, photos).
Credit pull (some lenders); minimal on private money.
Entity docs if borrowing through an LLC (operating agreement, EIN, certificate of good standing).

Exit strategies

Sell at ARV after rehab. The primary plan. List with an agent, sell to a retail buyer, pay off the hard-money loan from sale proceeds.
Refinance to a DSCR long-term loan. If the flip pivots to a rental, refi the hard money into a long-term DSCR loan at the new ARV. This is the BRRRR transition. See our BRRRR strategy guide.
Sell to another investor wholesale. If retail does not pan out and you need to exit fast, wholesale the property to another investor at a discount to ARV. Recovers most of your capital with little upside.

Cost structure (illustrative)

Illustrative only. Actual numbers vary by market, property, and lender.

Acquisition: $200,000.
Rehab budget: $50,000.
6 months interest at 11% on $250,000 loan balance: $13,750.
2 points origination on $250,000: $5,000.
Carry costs (insurance, utilities, taxes, holding): $4,000.
Total all-in cost: approximately $272,750.
Sell at ARV: $350,000.
Selling costs (commission, transfer tax, concessions): $25,000.
Net to seller: $325,000.
Profit: approximately $52,250 in 6 months.

When fix-and-flip loans make sense

You have a deal with a clear profitable spread after acquisition + rehab + carry + selling costs.
You can move fast on close; cash buyers compete heavily in distressed markets.
You have rehab project-management capability or a reliable general contractor.
You have liquidity for the equity portion, rehab share, and a cushion for overruns.
You have an exit plan, ideally with a backup (flip primary, BRRRR refi as fallback).

Risks

Rehab cost overruns. Almost every rehab runs over budget. Always pad contingency 15-20% on top of base estimate.
Market drops during the project. Comps soften, ARV does not hold, sale price comes in below model.
Holding cost on a slow sale. Every extra month on the market adds interest, taxes, insurance, and utilities. A property that sits unsold for 6 extra months can erase the profit.
Rate environment. Hard money rates can crush profit margins on thin deals. Run the math at the lender's actual rate, not at an optimistic assumption.
Permit or contractor issues. Delays at the city, a contractor who walks off the job, or a permit rejection can extend the timeline and add cost.

Frequently asked questions

What is a fix-and-flip loan?+

A short-term loan (typically 6-18 months) for investors buying a distressed property, rehabbing it, and selling it at the higher After Repair Value. The loan is interest-only, secured by the property, and underwritten primarily on the property rather than the borrower. Hard money and private money are the two main sources.

How much can I borrow on a fix-and-flip loan?+

Typical structures fund up to 90% of the purchase price plus 100% of the rehab budget (Loan-to-Cost), with the total loan capped at 65-75% of the After Repair Value (Loan-to-ARV). The lower of those two ceilings governs the actual loan amount. Stronger borrowers and stronger deals push toward the upper ends; weaker deals get cut back.

What rate do fix-and-flip loans charge?+

Rates typically run 10-13% in current market conditions, with 1-3 points (origination fees) charged upfront. Pricing varies with the lender, the borrower's experience, the deal's LTV/LTC, and the property type. Experienced flippers with multi-deal track records get the best pricing; first-time flippers pay a premium.

What credit score do I need?+

Most institutional hard-money lenders want 660+ FICO, though some go to 600 with strong liquidity and a clean track record. Private money is often more flexible on credit because the underwriting is property-and-relationship driven. Below 600 FICO is rare but available case-by-case in private money.

Can I do a fix-and-flip loan in my LLC?+

Yes. LLC vesting is standard on fix-and-flip loans, since the loans are business-purpose by definition (not consumer mortgages). Personal guarantee from the member(s) with 20%+ ownership is standard. Single-member, multi-member, and series LLCs all work.

How fast can a fix-and-flip loan close?+

As fast as 5-10 business days on a clean file. 2-3 weeks is more typical when the deal involves a new borrower the lender has not worked with before. Speed is one of the main reasons investors pay hard-money rates: closing fast wins distressed deals against competing cash offers.

What is the exit if my flip does not sell?+

The standard backup exit is to convert the property into a rental and refinance into a long-term DSCR loan at the new After Repair Value. This is essentially the BRRRR pivot. See our BRRRR strategy guide for the refi mechanics. Some hard-money lenders extend the term for a fee if the property is listed but not yet sold.

Quote a fix-and-flip scenario

Send us the purchase price, rehab budget, ARV, and your prior flip count. We will quote across the wholesale fix-and-flip market and find the lender going to the most permissive LTC and LTV available for your scenario.

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Eligibility, rates, and program guidelines vary by lender and are subject to change. This page is general educational information and is not a commitment to lend or an offer of credit. Equal Housing Opportunity.