If you're a real estate investor looking to scale your portfolio without jumping through the usual income-verification hoops, DSCR loans might just be your new best friend. At RP Capital Lending, we specialize in helping investors like you access the right funding solutions — and DSCR loans are one of the most powerful tools out there.

In this blog, we’ll break down what DSCR loans are, how interest rates are determined, current market rates, and smart strategies to lock in the best deals. Let’s dive in.

What Is a DSCR Loan?

A Debt Service Coverage Ratio (DSCR) loan is designed for real estate investors who prefer using a property's cash flow to qualify — instead of relying on personal income, W-2s, or tax returns.

DSCR is a simple yet powerful formula:

DSCR = Net Operating Income / Debt Obligations

So, if your property makes $5,000/month and your monthly loan payments are $4,000, your DSCR is 1.25 — meaning your rental income more than covers your debt.

Why investors love DSCR loans:

• No personal income documentation needed

• Ideal for portfolio expansion

• Works great for long-term and short-term rental properties

• Faster approval process

If you're self-employed, own multiple properties, or have irregular income, DSCR loans can be a total game-changer.

Current DSCR Loan Interest Rates in 2025

As we move through 2025, here’s what you can expect when it comes to DSCR loan interest rates:

• 🔹 Typical Rate Range: Most DSCR loan rates fall between 6.5% and 8.5%.

• 🔹 Average Rate: For a standard 30-year fixed DSCR loan, with:

  • A 25% down payment

  • A property DSCR of 1.1 or higher

  You’re likely looking at an average interest rate of around 7.65%.

• 🔹 Adjustable vs. Fixed: You can opt for fixed-rate loans (more stable) or adjustable-rate mortgages (ARMs), which often start lower but may increase over time — great if you’re planning to sell or refinance in a few years.

• 🔹 Short-Term Rentals: Rates for Airbnb or short-term rentals may be on the higher end of the spectrum, especially if the lender views them as riskier or if income is seasonal.

Why Are DSCR Rates Higher Than Conventional Loans?

It’s a great question — and it comes up a lot. Here’s why DSCR loans usually have slightly higher rates than conventional loans:

• ✅ No income verification: You’re not providing W-2s, pay stubs, or tax returns. That’s a big plus for investors, but it also means the lender is taking on more risk.

• ✅ Focus is on the property: Approval is based primarily on the property’s ability to generate income, not your personal income situation.

• ✅ Designed for speed and ease: Less documentation = faster closings, which is a huge benefit in competitive markets.

• ✅ Property type matters: Rental properties are generally considered riskier than primary residences, which adds a bit of a premium to the interest rate.

What Affects DSCR Loan Interest Rates?

Here’s where things get interesting. Your rate isn’t just pulled out of thin air — lenders assess several key factors:

1. Property’s DSCR (Debt Service Coverage Ratio)

The higher your DSCR, the better. A property with a DSCR above 1.25 is considered solid — it shows the rental income comfortably covers the mortgage. Properties barely breaking even (around 1.0) are riskier for lenders, so you may see higher rates.

💡 Tip: A higher DSCR can unlock better terms, including lower rates or reduced fees.

2. Investor’s Credit Score

Yes, your personal credit still matters — even if income doesn't. A credit score above 700 typically earns more favorable interest rates. Anything below 660 may lead to higher costs or limited lender options.

💡 Tip: Keep your credit clean — pay down revolving debt and avoid new credit inquiries before applying.

3. Down Payment Size

A larger down payment lowers the lender’s risk — and that can translate into better pricing for you. Most DSCR loans require 20%–25% down, but putting more skin in the game could improve your terms.

💡 Tip: Consider putting down 30%+ for premium rates, especially if the DSCR is on the lower side.

4. Your Experience as an Investor

New investors can still qualify, but seasoned investors (those with a few deals under their belt) might be rewarded with more competitive terms. Lenders feel more confident working with people who have proven success.

💡 Tip: Keep a portfolio summary handy — show off your track record.

5. Market Conditions & Federal Reserve Rates

DSCR loans don’t exist in a vacuum — they’re still influenced by broader economic trends, especially the Federal Reserve’s interest rate decisions. If rates rise nationwide, DSCR loan rates tend to follow.

💡 Tip: Lock your rate quickly in rising markets — some lenders offer rate locks for 30+ days.

DSCR Loan Down Payment Requirements

Let’s talk down payments — one of the most important pieces of the DSCR loan puzzle.

80% LTV (20% down)

This is the most common option — and usually available to investors with:

• A DSCR of 1.25 or higher (meaning the rental income comfortably covers the mortgage)

• A solid credit score (think 700+)

• A clean investment history

If you’ve got a strong deal, this lower down payment helps you keep more capital for other projects.

👉 Ideal for: long-term rentals with stable cash flow and experienced investors.

75% LTV (25% down)

This is a more conservative — and safer — loan structure. It’s often recommended when:

• Your property’s DSCR is hovering around 1.0 (just enough income to cover the loan)

• Your credit score is in the mid-600s to low-700s

• You’re newer to real estate investing

It gives lenders extra peace of mind and can make it easier to qualify if your deal is borderline.

👉 Ideal for: newer investors or properties with tighter margins.

70% LTV or Lower (30%+ down)

In some situations, lenders may require a larger down payment — especially if:

• You're investing in short-term rentals (like Airbnb or VRBO), which may have variable income

• Your credit score is below 660

• The DSCR is below 1.0, meaning the property’s cash flow doesn’t fully cover the loan

This extra cushion protects the lender and helps offset potential risks in less stable deals.

👉 Ideal for: riskier investments or when you're building trust as a borrower.

What Else Impacts Your Down Payment?

Several other factors can affect how much you'll need to put down:

• Property Type: Short-term rentals, mixed-use, or vacation homes may require more upfront.

• Investor Experience: Seasoned investors with multiple properties might get more flexible terms.

• Loan Size & Location: Some markets are riskier than others — and jumbo loans may require more equity.

• Credit Profile: The better your credit, the more wiggle room you’ll have when it comes to down payment requirements.

How to Get the Best DSCR Loan Rate?

We’re all about giving our clients a competitive edge. Here’s how to score better DSCR loan terms:

✅ Improve Your Credit Score

Even small bumps (like going from 680 to 700) can make a big difference in rates.

✅ Put More Down

A higher down payment reduces LTV and increases lender confidence.

✅ Choose High-Performing Properties

Look for properties with a DSCR of 1.25 or higher to get better rates and fewer fees.

✅ Use Adjustable-Rate Options (When It Makes Sense)

If you’re flipping or selling within 3–7 years, an ARM could offer a lower rate up front.

✅ Buy Discount Points

Paying points at closing can lower your rate long-term — especially if you’re holding the property.

✅ Work With a Specialized DSCR Lender (like RP Capital Lending!)

We live and breathe investor lending. Our team understands your goals and finds creative solutions that fit your strategy.

Final Thoughts: Is a DSCR Loan Right for You?

If you’re a real estate investor looking to scale without traditional income checks, DSCR loans could be your golden ticket. Yes, the interest rates might be slightly higher — but the flexibility, speed, and simplicity often make it well worth it.

At RP Capital Lending, we help you find the best possible terms — whether you're buying, refinancing, or building your portfolio.

📞 Have questions? Reach out to our lending team today — we’re real people who love helping real investors succeed.

Frequently Asked Questions (FAQs)

1. What is the minimum down payment for a DSCR loan?

Most DSCR lenders, including RP Capital Lending, require a minimum 20% down payment, but this can vary based on credit score, DSCR ratio, and property type.

2. Are DSCR loans good for short-term rentals like Airbnb?

Yes, DSCR loans can work for short-term rentals, but lenders may require a higher down payment (25–30%) and more documentation of rental income history.

3. What credit score do I need for a DSCR loan?

A credit score of 680+ is recommended, though some lenders may approve borrowers with scores as low as 660 with stronger property performance or a larger down payment.

4. Can I get a DSCR loan without showing personal income?

Absolutely. That’s the beauty of a DSCR loan — qualification is based on the property’s rental income, not your personal income, W-2s, or tax returns.

5. Are DSCR loan rates higher than conventional loan rates?

Typically, yes. DSCR loan rates are usually 0.5%–1% higher than conventional loans, in exchange for more flexible and streamlined underwriting.