DSCR Loans Explained — How Investors Are Buying Properties Without Tax Returns

If you’re a real estate investor, you know traditional lenders can make financing a nightmare — especially if your income comes from multiple rentals, flips, or self-employment.

That’s where DSCR loans come in.
These loans have become a game-changer for Michigan investors, allowing you to buy or refinance properties without using tax returns.

Let’s break down how they work, who qualifies, and why they’re fueling today’s multifamily boom.

🧮 What Is a DSCR Loan?

DSCR stands for Debt Service Coverage Ratio — a simple formula lenders use to measure a property’s ability to pay for itself.

DSCR = Net Operating Income ÷ Loan Payment

If the ratio is above 1.0, it means the property generates enough income to cover its mortgage.
Most lenders want to see a DSCR of 1.0–1.25, depending on the loan size and market.

🧠 Example:
If your rental earns $2,000/month and your mortgage is $1,600/month,
DSCR = 1.25 → that’s a strong deal.

💰 Why Investors Love DSCR Loans

✅ No tax returns required
✅ Qualify based on property income, not personal income
✅ Perfect for investors with multiple LLCs or self-employment
✅ Works for single-family rentals, duplexes, and multifamily
✅ Fast approvals and flexible underwriting

These loans are ideal for both new and experienced investors looking to scale without traditional red tape.

🏦 Basic DSCR Loan Requirements

Each lender is different, but here’s what most look for:

• Minimum credit score: 620–680+

• Down payment: 20–25%

• Minimum DSCR: 1.0–1.25

• Property type: 1–8 units (some commercial options available)

• Proof of rent roll or lease agreements

⚙️ Pro Tip: Even if you don’t have tenants yet, lenders can use market rent estimates from an appraiser to qualify the property.

📊 How DSCR Loans Compare to Traditional Loans

📍 Where DSCR Loans Work Best in Michigan

Markets with strong rent-to-price ratios perform best for DSCR underwriting.
These include:

• Detroit – high cash flow, multifamily growth

• Taylor & Lincoln Park – affordable entry prices

• Livonia & Redford – stable long-term tenants

• Dearborn & Canton – strong appreciation and rent demand

🧾 Pro Tip: DSCR Loans + LLC Ownership

Most DSCR lenders allow you to buy properties under an LLC, which keeps your personal name off the mortgage and strengthens asset protection — critical for growing portfolios.

S&P Realty works with multiple DSCR-approved lenders who specialize in Michigan investors and LLC-based loans.

💸 Example DSCR Deal

• Purchase Price: $220,000

• Monthly Rent: $2,200

• Estimated PITI: $1,700
  → DSCR = 1.29 (qualifies easily)
  The investor closes with no tax returns, no employment docs, and adds $500/month positive cash flow to their portfolio.

🚀 Scale Faster With DSCR Financing

These programs are helping Detroit-area investors grow portfolios without being limited by personal income caps.

At S&P Realty, we connect you to trusted DSCR lenders, analyze your deals, and help structure purchases to maximize returns.

📞 Ready to Buy With a DSCR Loan?

If you’re an investor ready to buy or refinance a rental or multifamily property in Metro Detroit, now’s the time to leverage DSCR financing.

Let Shane Parker and S&P Realty help you find cash-flowing properties and lenders who understand investor strategy.

👉 Click here to contact S&P Realty for your investor consultation today.