No-Ratio DSCR vs Standard DSCR
A standard DSCR loan requires the property to cash-flow — typically 1.0+ debt-service-coverage ratio (rent ≥ PITI payment). A no-ratio DSCR loan removes that requirement entirely. The trade is a lower LTV and slightly higher rate, but you can close on properties that do not pencil under long-term-lease comps.
Standard DSCR
Rent must cover the mortgage payment.
Best for: Cash-flowing rentals in mid-cap-rate markets.
Pros
- +Best DSCR pricing tier
- +Highest LTV available (up to 80%)
- +Standard DSCR documentation
Cons
- −Property must DSCR — vacant or low-rent properties may not qualify
No-Ratio DSCR
No DSCR requirement at all.
Best for: Coastal, urban, or high-priced markets where rents do not cover payments.
Pros
- +Vacant properties at close acceptable
- +No long-term-lease comp requirement
- +Same paperwork as standard DSCR
Cons
- −LTV capped 5–10% lower than standard
- −Rate premium 0.25–0.5%
- −Cash-out may cap at 60–65% LTV
| Field | Standard DSCR | No-Ratio DSCR |
|---|---|---|
| Min FICO | 660+ | 680+ |
| LTV (purchase) | Up to 80% | Up to 70–75% |
| LTV (cash-out) | Up to 75% | Up to 60–65% |
| Income docs | DSCR ≥ 1.0 (often 1.20–1.25 for best rate) | No DSCR floor |
| Term | 30-year fixed | 30-year fixed |
| Time to close | 21–30 days | 21–30 days |
Which one should you choose?
- Standard DSCR: choose standard DSCR whenever the property cash-flows. Better LTV, better rate, simpler.
- No-Ratio DSCR: choose no-ratio DSCR when long-term-lease comps would fail you — coastal SFRs, vacant properties at close, planned short-term rental conversions.
- For STR properties, also consider STR-DSCR which uses nightly-rate income (often the best of both).
Frequently asked questions
How is "no-ratio" different from "low-DSCR"?
Low-DSCR programs allow a DSCR below 1.0 (often down to 0.75) at reduced LTV. No-ratio programs ignore the ratio entirely, including DSCR of 0.0 (vacant property).
Can I use no-ratio for cash-out refinance?
Yes, with cash-out LTV usually capped 5% lower than purchase.
Not sure which fits your scenario?
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