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DSCR Loans Explained: A Guide for Real Estate Investors

DSCR Loans Explained: A Guide for Real Estate Investors

If you’re a real estate investor looking to grow your portfolio, you’ve probably heard the term ‘DSCR loan’ thrown around. But what exactly is it, and why has it become such a popular financing option?

What Is a DSCR Loan?

DSCR stands for Debt Service Coverage Ratio. Unlike traditional mortgages that focus heavily on your personal income and W-2s, DSCR loans qualify you based on the property’s income potential. In simple terms: if the rental income covers the mortgage payment (and then some), you can qualify.

The formula is straightforward. Take the property’s gross rental income and divide it by the total debt obligations (principal, interest, taxes, insurance, and HOA if applicable). Most lenders want to see a DSCR of at least 1.0, meaning the rent covers the payment exactly. A ratio of 1.25 or higher typically gets you better rates and terms.

Why Investors Love DSCR Loans

The appeal is obvious for self-employed borrowers, business owners, or anyone with complex tax returns. You don’t have to explain every write-off or justify why your Schedule C shows a loss. The property speaks for itself.

These loans also make it easier to scale. If you already own several rentals and your debt-to-income ratio is maxed out on paper, DSCR financing lets you keep acquiring properties as long as each one cash flows

What to Expect

DSCR loans typically require a larger down payment—usually 20-25%—and rates run slightly higher than conventional financing. Credit score requirements are generally in the 680+ range, though some programs go lower with compensating factors.

You’ll need an appraisal that includes a rental analysis, showing what the property can reasonably command in rent. Lenders will verify this against market data

Is It Right for You?

DSCR loans aren’t for everyone. If you’re buying a primary residence or a property that won’t generate rental income, this isn’t the product for you. But for investors focused on cash flow, it’s a powerful tool that simplifies the qualification process and lets the numbers do the talking.

Have questions about whether DSCR financing fits your next deal? Let’s talk.

Meet Jennifer Cabrera

From the energy capital of the world to the sun-soaked shores of South Florida, Jennifer Cabrera has built a career that most loan originators can only dream of. A Houston native now calling Miami home, Jennifer has spent over 30 years mastering the art and science of commercial mortgage lending.

Her journey began at Novastar Financial, where she didn’t just learn the ropes—she dominated them. Year after year, Jennifer ranked among the company’s top three loan originators, a testament to her relentless work ethic and natural ability to connect with clients.

Today, Jennifer serves as CEO of Atlantic Union Inc., where she and her team excel in providing commercial private lending solutions tailored for high-net-worth clients, both consumers and investors. With over five years at the helm, she has honed a niche in wholesale lending, offering unsecured business operating capital to empower her clientele. It’s the kind of specialized expertise that only comes from decades of navigating the complexities of commercial finance.

In tandem with her role at Atlantic Union, Jennifer has launched NewCenturyMortgages (NCM)—an AI-powered lending platform where commercial real estate and technology collide. Purpose-built for serious investors, NCM was born from a simple idea: investors shouldn’t have to jump through hoops to get funded, and brokers shouldn’t have to wait months to see a commission check. Powered by AI and built for speed, NCM specializes in DSCR loans, portfolio financing, commercial real estate, and asset-based lending. Forget the paperwork. No income verification.

Armed with an MBA in Finance and Wealth Management from Purdue University and lending licenses in both California and Florida, Jennifer brings a rare combination of academic rigor and real-world expertise to every transaction. Whether structuring complex deals for seasoned investors or providing the capital that helps businesses grow, her clients know they’re in capable hands.

But Jennifer’s impact extends far beyond the closing table. As an active volunteer with the Junior League of Miami, she’s deeply committed to giving back to the community that has embraced her. And when she’s not leading Atlantic Union or serving her community, you’ll likely find her exploring a new corner of the world—because after three decades of hard work, she’s earned every stamp in that passport.

Kim Tillinghast

Principal, Partner

Kim Tillinghast began her career in the banking industry in 1985. She graduated with a degree in Finance from West Texas State University in 1990 and has continued her education by earning her Series 24 General Securities Principal Exam and Certified Plan Fiduciary Advisor (CPFA™). Shortly thereafter she started her brokerage career at a traditional wirehouse in downtown Los Angeles, California in 1991. After relocating to Orange County, Kim became an independent financial advisor in May of 1993. She brings over 37 years in the banking and finance industry with experience ranging from designing, developing, employing and maintaining complex investment strategies, Pension Plans, Employee Stock Option Plans, Corporate Finance, Estate Planning and Transition. Outside of her career, she served as Co-Chair of the Dallas County Susan G. Komen Race for the Cure 2013 and 2014 and currently serves on the Board of the Tillinghast Society, Inc. With a deep love for animals, she continues to volunteer for multiple emergency animal response teams including Red Rover, HSUS, UAN, ASPCA and volunteers weekly at the Irving Animal Shelter. Kim also loves worldwide adventure travel and has many amazing experiences visiting almost half of the world’s countries and all seven continents, twice.

Karthik Muraliraj

CFP®, ChFC®, CLU®, RMA®, Partner

Karthik Muraliraj was raised in Fort Worth, Texas, and developed an interest in investing and economics at a young age. After graduating from the University of Texas at Austin with a Bachelor of Arts in Economics and a minor in Business, he started his career as a financial professional in 2008. Throughout his career, Karthik has continued to educate himself by gaining multiple designations. Since moving to Dallas, he has been an active member in the community—volunteering with organizations such as the network of Indian Professionals, Dallas Autumn Ball and Reading Partners. Karthik is an avid sports fan and enjoys supporting his alma mater as a proud member of the Texas Exes Dallas Chapter. In his free time, Karthik enjoys cooking, travel, fitness and spending time with this wife, son, dog, and cat.

Crystal Arredondo

MBA, CDFA®, CPFA™, Partner

Crystal Arredondo was born and raised in Germany. She moved to Texas following her parents’ decision to retire after serving an overseas career in the Armed Forces. Seeing firsthand the difficult transition to civilian life after retirement, Crystal obtained her MBA in Finance at the University of North Texas and began her career as a financial advisor. In 2009, she completed the Retirement Planning Specialist Program at the Wharton School of Business, University of Pennsylvania. In 2018, she earned her designation of Certified Divorce Financial Analyst® (CDFA®). In 2022, she earned the additional designation as a Certified Plan Fiduciary Advisor (CPFA™). As the daughter of an immigrant mother, she especially enjoys helping women and business owners make decisions that affect their financial independence. She served as the 2015-16 Chair for the National Association of Women Business Owners (NAWBO) and 2016-17 Chair for the NAWBO Institute of Entrepreneurial Development.

Philip Strunk

CFP®, CPA, Partner

Philip Strunk is a native of Houston, TX. Philip earned his Bachelor of Business Administration and Masters in Professional Accounting from the University of Texas at Austin’s McCombs School of Business. He earned his designation as Certified Public Accountant (CPA) in 2004 and CERTIFIED FINANCIAL PLANNER (TM) certification in 2010. Having started his career with Deloitte & Touche, LLP in 2005, Philip spent a year and a half in Deloitte’s Audit and Assurance Services group and provided a variety of financial services for a number of Fortune 500 companies. He decided in late 2006 that his talent and passion for investments were best suited for working with smaller groups and individuals. After obtaining the required securities registrations and insurance licenses, Philip became a financial advisor. The impact was plainly visible and more fulfilling. Philip serves as the Investment Director for MPACT.

John C. Farris

CAP®, CFS®, Partner

John C. Farris is a founding partner and has more than forty years in both public and private business serving in a variety of management and leadership capacities. John completed the Retirement Planning Specialist Program at the Wharton School of Business at the University of Pennsylvania earning the Retirement Planning Specialist designation. John and his family have a history of philanthropic giving through numerous non-profit organizations. John recently completed his designation as a Chartered Advisor in Philanthropy® (CAP®). He is also a member of The International Association of Advisors in Philanthropy. His primary goal is to help people give intelligently with love and thereby experience the true joy of helping others. John lives in Park Cities and has served on the Public Works Advisory Council, as finance director of the BSA West Park District, the BSA Troop 82 Executive Board, and as a BSA Assistant Scoutmaster for Troop 82, Dallas, Texas.