When you’re seeking financing for an investment property, finding the right DSCR loan lender can make or break your deal. A DSCR loan program is designed for real estate investors who qualify based on rental income rather than personal income, but not all lenders—or loan programs—are created equal. Working with an experienced mortgage broker who understands the DSCR lending landscape can save you time, money, and potential headaches.

Here's What You Need to Know to Find the Right DSCR Lender

Choose a Lender Experienced with Investors

Not all lenders are comfortable with investor-focused loan programs. When choosing a DSCR loan lender, look for one who works with investors regularly and understands the nuances of investment property financing.

As a broker, I have access to over a hundred different DSCR lenders, but I typically send loans to only four or five. Why? Because each DSCR loan program has its own criteria—minimum credit scores, loan amounts, and DSCR ratio requirements.

For example:

• Only a handful of lenders offer DSCR loans for credit scores around 620.

• Some lenders will finance as low as $75,000, while others require much higher minimums.

Consider the DSCR Ratio and Appraisals

The Debt Service Coverage Ratio is the foundation of a DSCR loan. If your ratio is close to 1.0, you’ll need a DSCR loan program that allows ratios below one—otherwise you risk paying for an appraisal only to discover the projected rents don’t cover your payment.

A knowledgeable DSCR loan lender or broker will evaluate:

• Local rental market comps

• Property taxes and insurance

• HOA dues (which can significantly impact your DSCR ratio)

Ensure Accurate Property Evaluations

Before applying, your broker should compare your property to similar rentals in the area to estimate potential rental income—especially if it’s vacant. A strong property evaluation upfront helps avoid surprises that could derail your approval.

Seek Competitive Rates and Transparent Terms

Rates and fees vary widely between DSCR loan lenders. If you shopping for a DSCR loan and want to know how they calculate your rate. There are the 7 factors DSCR lenders use to calculate your DSCR interest Rate.

1. Loan to Value (LTV)

2. Credit Score

3. Loan Purpose

4. Property Type

5. Pre Payment Penalty Length

6. Investor Experience

7. DSCR Ratio

Transparency is key—make sure you get a breakdown of rates, fees, and prepayment penalties in writing. You can find today’s current DSCR loan rates by doing a quick search online or visiting this page.

Understand Prepayment Penalties

Prepayment penalties are common in DSCR loans and can range from zero to five years. The longer the penalty, the better the rate tends to be—but you lose flexibility.

Example: With a five-year penalty, refinancing in the first year could mean paying 5% of the remaining loan balance. Always clarify terms before signing.

Important Questions to Ask a DSCR Loan Lender

• Do you work extensively with investors? Ask how many investor clients they’ve closed recently.

• Are there prepayment penalties? Know the duration and cost of penalties.

• What are the rates and fees? Request a breakdown of origination fees and discount points (see Section A of your Loan Estimate).

Leverage Your Credit Score

Once a lender pulls your credit, you have a 30-day window where additional credit checks won’t affect your score. Keep your rate shopping within two weeks to maximize your chances of getting the best offer.
If your score is just below a rate threshold, ask about a rapid rescore—sometimes paying down a credit card can bump you into a better bracket.

Final Takeaway

Choosing the right DSCR loan lender and the best DSCR loan program is about more than just interest rates—it’s about aligning with a lender that understands your investment strategy, offers flexible DSCR ratio guidelines, and provides transparent terms.

By asking the right questions and working with an experienced broker, you can secure a DSCR loan that supports your investment goals while minimizing costs.