Rental property
A rental mortgage that looks at the rent
Qualified mainly on the rental property's income versus its debt payments, not on your personal income.
Written by Allen Hong, NMLS 1295255·Last updated: October 8, 2026
Who this is for
This is for people buying or refinancing a property that is rented, or that will be rented. A fix and flip is a different loan.
How qualifying works
- DSCR means debt service coverage ratio. It compares the property's qualifying rental income with the property's qualifying payment.
- Personal job income is not the main story. Credit, reserves, the property, and whether the program is available in that state still matter.
- The lender decides which rent figure counts and which payment pieces go into the bottom of the ratio. There is no single minimum on this page.
What usually goes into the payment
The payment side often includes principal and interest, property taxes, and insurance. HOA dues are included when the property has them. Some lenders add other property costs. Ask which pieces are in the payment they will use, and whether the rent is the lease, a market rent, or the lower of the two.
- Is a short-term rental allowed, and if so, on what rental history?
- If the property is vacant, will a market rent schedule be used?
- Can the property be held in an entity, and does that change the file?
- Is this limited to one-to-four units, or is the property type outside that?
Questions to ask about a prepayment penalty
Many DSCR loans charge a penalty if you pay the loan off early. Ask before you compare offers.
- Is there a prepayment penalty at all?
- How long does it last?
- Is it a set number of months of interest, a percentage of the balance, or a schedule that steps down?
- Does selling trigger it, and does refinancing trigger it?
Illustrative example
If the qualifying rent is $3,000 and the qualifying property payment is $2,500, the ratio is 1.20. That only shows the arithmetic. The lender chooses the rent, the payment pieces, and the minimum ratio it will accept. This is not a quote and not a qualification.
What you'll need
- A lease or a rent estimate
- Entity documents, if you are buying in an entity
- Photo identification
- Information about reserves
- Insurance
- Property details