DSCR explained

Debt Service Coverage Ratio: how an investment property qualifies on its own rent, and the three numbers that decide it.

The ratio

DSCR = monthly rent divided by the monthly payment (principal, interest, taxes, insurance, and any HOA). A ratio of 1.0 means the property covers its own payment; lenders generally want to see 1.0 or higher.

The other two numbers

Down payment (or equity on a refinance): typically 10 to 20 percent.
Reserves after closing: roughly six months of payments.

Why investors use it

The decision rests on the property's income rather than personal tax returns, and title can usually be held personally or in an LLC. TK Capital Solutions is a funding brokerage, not a lender. Requirements vary by lender and program; nothing here is a promise of approval, amount, or timing.

The property qualifies, not the borrower

DSCR stands for Debt Service Coverage Ratio: the property rental income divided by its monthly debt payment. On a DSCR loan, lenders use that ratio in place of the borrower tax returns or W-2 income to decide whether the property can carry the loan.

That is the entire appeal. Real estate investors with complicated or write-down-heavy returns often look weak on paper as individuals while owning perfectly sound assets. DSCR underwrites the asset instead.

Who it fits

Investors buying or refinancing rental property - single-family rentals, small multifamily, and in many cases short-term rentals. It is especially useful for self-employed investors, investors who already own several properties, and anyone whose personal income does not tell the real story of what they can afford.

The three numbers that decide it

The ratio itself. The rent generally needs to cover the debt payment - at or above 1.0, with many lenders preferring more headroom than that.
The down payment. Typically 10 to 20 percent on a purchase.
The reserves. Roughly six months of the mortgage payment held back after closing is a common expectation.

Personal credit still matters even though income documentation does not, and properties are usually held either in an LLC or individually depending on what the lender program allows.

What to have to hand

Very little, compared to a business loan. The property address or type, the purchase price or current value, the expected or current rent, whether it is a purchase or a refinance, roughly what is available for the down payment and reserves, and whether other rentals are already owned.

You do not need to work out the ratio yourself. That is our side of it.

What varies

Down payment, reserves, ratio thresholds, rates and terms all depend on the lender and on the property. These are general guidelines, not guaranteed approval requirements, and nothing here guarantees funding.

Common questions

What if the rent doesn't quite cover the payment?: Some programs work below 1.0 with a larger down payment or reserves; others don't. It's worth a conversation before assuming either way.