How a DSCR loan works
How a DSCR loan works — Jaken Finance Group breaks down the debt service coverage ratio, the 1.0 minimum, leverage tiers, and the paperwork you need.
Want the full breakdown with underwriting details, FAQs, and next steps? Read How a DSCR Loan Works: The 1.0 Ratio Explained (2026 Update).
Video transcript
Lightly edited for clarity.
In this video we're going to talk about how a DSCR loan works. Very, very simple. What we want to make sure is that the rental income — either the actual rental income or the market rents as determined by the appraisal — over the PITIA (that's principal, interest, taxes, insurance, and if you have any association fees) is greater than or equal to 1.0.
This is the minimum requirement to get the most favorable terms. Can we go less than 1.0? Yes, but that means your rate goes up. So keep this number above 1.0.
You should be doing this research ahead of time, before you actually acquire the property, to ensure that you will at least have this number to successfully refinance. You do the renovation on the loan, and your typical leverages are 75 to 80% of the value once the rehab is done.
You can go as high as 85%, but you need really, really good credit and really, really good experience to qualify for the 85% DSCR loan. Some of the paperwork that you'll need to get this done is either a lease, or we can use market rent from the appraisal.