Looking for a DSCR HELOAN?
Access Equity without Refinancing
Qualify Based on Rental Income Only!
No Personal Income Needed to Qualify!
Interest Only Options Available!
Fund Into Corporation or LLC
No Pre-Pay Options
AirBnB's Allowed
Answer a Few Quick Questions and See if You’re Eligible
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Qualify Based on bank statements only!
No W2's or Tax Returns Needed!
Interest Only Options Available!
Get up to 90% Financing
100% Gift Funds Allowed
Fixed Rate and Adjustable Rate Options
What Is a DSCR HELOAN?
A DSCR HELOAN (debt service coverage ratio home equity loan) is a fixed-rate second mortgage on an investment property. You receive the full loan amount as a lump sum at closing and repay it with a fixed payment over a set term, while your existing first mortgage stays exactly where it is.
Instead of tax returns, W-2s or a debt-to-income ratio, the loan qualifies on one question: does the property's rent cover its total housing payment, including the new HELOAN?
It's built for investors who locked in a low first-mortgage rate, know exactly how much capital they need, and want a payment that never changes.
Need a line you can draw on over time instead? Compare the DSCR HELOC, or read our guide: What Is a DSCR HELOC?
The DSCR formula
DSCR = Monthly Rent ÷ Total Housing Payment
Total housing payment = first mortgage + HELOAN payment + taxes + insurance + HOA dues.
- 1.00+ rent covers the full payment (minimum to qualify)
- 1.25+ earns the best rate pricing
- $1,250 in rent for every $1,000 of payments = a 1.25 DSCR
Want to check your numbers? Try our DSCR calculator.
How a DSCR HELOAN Works
One loan, one closing, one fixed payment. Your first mortgage is never touched.
Qualify on rent
An appraisal with a rent schedule (Form 1007) and your lease set the rent. If it covers both payments, you qualify.
Choose your terms
Pick your loan amount, a 10, 15, 20 or 30-year fixed term, and the prepayment option that fits your plans.
Close & fund
Sign in your name or your LLC and receive the full loan amount as a lump sum at closing.
Fixed payments
Repay with the same principal and interest payment every month until the loan is paid off.
Why Get a DSCR HELOAN?
Keep your low rate
Your existing first mortgage, and its rate, stays in place. Only the new HELOAN carries today's rate.
No income docs
No tax returns, W-2s, pay stubs or DTI. You qualify on the property's rental income.
Fixed rate & payment
A fixed rate for the life of the loan means a predictable payment you can budget around.
Close in your entity
Keep the property titled in your LLC. No need to move it into your personal name.
Airbnb friendly
Short-term rentals are eligible, so vacation-rental investors can tap their equity too.
Prepay flexibility
Choose a prepayment penalty from 5 years down to none, and trade it off against your rate.
Ways Investors Use a DSCR HELOAN
Funds must be used for business purposes. Popular uses include:
- Down payments on additional rental properties
- Renovations and value-add improvements that raise rents
- Paying off hard money or bridge loans
- Consolidating higher-interest business debt into one fixed payment
- Funding a fix-and-flip project
- Building reserves for vacancies, repairs or the next deal
Pulling equity from a single-family rental
For illustration only. Not a rate quote or commitment to lend. Your rate and terms depend on credit, DSCR, CLTV, loan size and property.
DSCR HELOAN Requirements
Here's what it takes to qualify. We'll match your scenario to the best available pricing.
How DSCR HELOAN Rates Are Determined
Your rate is built from the risk factors below. Small changes, like a shorter prepayment period or a higher DSCR, can move your pricing.
| Factor | Better pricing | Higher pricing |
|---|---|---|
| Credit score | 720+ | 680–719 |
| DSCR | 1.25 or higher | 1.00–1.24 |
| Combined LTV | Lower CLTV (more equity left) | Up to 80% CLTV |
| Prepayment penalty | Longer penalty (up to 5 years) | No penalty |
| Loan term | Shorter fixed term | 30-year fixed |
| Property type | Single-family, PUD, townhome | Condo, 2-4 units, short-term rental |
| Payment method | ACH autopay | Manual payments |
Learn how each prepayment option works in our guide to DSCR loan prepayment penalties.
DSCR HELOAN vs. DSCR HELOC
Both let you tap a rental's equity on its cash flow. The difference is how you receive the money and how your rate behaves.
| DSCR HELOAN | DSCR HELOC | |
|---|---|---|
| Structure | One-time fixed-rate loan | Revolving line of credit |
| How you get funds | Full amount at closing | Initial draw, then draw as needed |
| Rate | Fixed | Variable |
| Payments | Fixed principal + interest (I/O options) | Interest-only during the draw period |
| Minimum credit | 680 | 700–720 |
| Your first mortgage | Kept | Kept (second lien) or replaced (first lien) |
| Prepayment penalty | Optional, 5 years to none | None |
| Best when… | You know the exact amount and want a fixed payment | You'll need money in stages over time |
See the full breakdown on our DSCR HELOC page, or explore a full DSCR cash-out refinance.
DSCR HELOAN Pros and Cons
- Keep your existing low-rate first mortgage
- Qualify on rental income, not personal income
- Fixed rate and a payment that never changes
- Full loan amount at closing
- Terms from 10 to 30 years, with interest-only options
- Close in your LLC
- Short-term rentals eligible
- Lower 680 credit minimum than DSCR HELOCs
- Adds a second payment on top of your first mortgage
- Rates are higher than on a first mortgage
- Interest accrues on the full amount from day one
- Can't re-borrow once it's paid down
- Lowest rates usually come with a prepayment penalty
- Rent must cover both payments (1.00+ DSCR)
- Higher appraisal cost because of the rent schedule
- Investment properties only
Is a DSCR HELOAN Right for Your Situation?
| If this sounds like you… | Consider | Why it fits |
|---|---|---|
| I locked a great rate on my first mortgage | DSCR HELOAN | Your first mortgage stays untouched. Only the new loan carries today's rate. |
| I know exactly how much I need for my next project | DSCR HELOAN | Get the full amount at closing with a fixed payment from day one. |
| My credit score is between 680 and 699 | DSCR HELOAN | HELOANs start at 680, below the 700–720 minimum for DSCR HELOCs. |
| My rental is on Airbnb or VRBO | DSCR HELOAN | Short-term rentals are eligible on the HELOAN program. |
| I buy or rehab several properties a year | DSCR HELOC | A revolving line lets you draw, repay and reuse the same credit for each deal. |
| My rental is paid off | First-lien DSCR HELOC | Open a line of up to 75% of value without taking a lump sum you don't need yet. |
| I want to refinance everything into one loan | DSCR cash-out refi | Replace your existing mortgage and pull equity in a single loan. |
DSCR HELOAN Frequently Asked Questions
Click any question to see the answer.
What is a DSCR HELOAN?
A DSCR HELOAN is a fixed-rate home equity loan on an investment property. It sits in second position behind your existing mortgage, pays out as a lump sum at closing, and qualifies on the property's rental income instead of your personal income.
What credit score do I need for a DSCR HELOAN?
The minimum is 680. With a 720+ score you can access up to 80% combined loan-to-value on loans up to $500,000, and you'll generally see better pricing.
How much can I borrow?
DSCR HELOANs range from $100,000 to $750,000. Your maximum also depends on your combined loan-to-value (up to 80%), credit score, and whether the rent supports the new payment.
What is the minimum DSCR for a HELOAN?
1.00. The property's rent must cover your first mortgage, the HELOAN payment, taxes, insurance and any HOA dues. A DSCR of 1.25 or higher earns the best pricing.
Do I have to refinance my first mortgage?
No. A DSCR HELOAN is a second mortgage, so your existing first mortgage, its rate and its payment all stay the same.
What loan terms are available?
10, 15, 20 and 30-year fixed terms, with interest-only options available on some scenarios.
Is there a prepayment penalty?
You choose. Options range from a 5-year prepayment penalty down to none. A longer penalty usually lowers your rate, while no penalty gives you full flexibility to sell or refinance.
Can I close a DSCR HELOAN in my LLC?
Yes. Properties held in an LLC are eligible, so you don't need to move title into your personal name.
Can I use a DSCR HELOAN on an Airbnb or short-term rental?
Yes. Short-term rentals are eligible on the DSCR HELOAN program, qualified on the property's rental income.
Should I choose a DSCR HELOAN or a DSCR HELOC?
Choose a HELOAN if you know the exact amount you need and want a fixed rate and payment. Choose a DSCR HELOC if you want a revolving line to draw on as deals come up. Our guide What Is a DSCR HELOC? walks through the differences.
DSCR HELOANs are business-purpose loans available on non-owner-occupied investment properties only. Programs, rates, terms and guidelines are subject to change without notice. All loans subject to credit approval, property eligibility and underwriting. Not available in all states or areas. Examples are for illustration only and are not a commitment to lend. Broker Buddy LLC, NMLS #2022974. Equal Housing Opportunity.
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STEP 1
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STEP 2
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STEP 3
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Broker Buddy LLC
Trevor Gravink
Mortgage Consultant
CEO/Owner
(619) 404-6637
NMLS: 1707407
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