The Investor’s Secret to Qualifying Without Tax Returns

For many real estate investors, the biggest hurdle to growth isn’t finding the right property—it’s the paperwork. Traditional lending often penalizes the self-employed or those with complex tax returns, using a high Debt-to-Income (DTI) ratio to stall your next acquisition.

Enter the DSCR (Debt Service Coverage Ratio) Loan.

What is a DSCR Loan?

A DSCR loan is a “non-QM” (non-qualified mortgage) product specifically designed for investment properties. Unlike a conventional loan, the lender doesn’t care about your W-2s, pay stubs, or personal income. Instead, they look at one thing: Does the property’s rental income cover its debt?

How the Math Works

The lender calculates the ratio by dividing the property’s Net Operating Income (NOI) by its Annual Debt Service.

• Ratio > 1.0: The property generates more than enough to cover the mortgage.
• Ratio < 1.0: The property has negative cash flow (some lenders still allow this with higher down payments).
• The Sweet Spot: Most lenders look for a ratio of 1.20 or higher to offer the most competitive rates.

Why Investors Love DSCR Loans

1. No Personal Income Required: Perfect for entrepreneurs and “house hackers” who show minimal taxable income.
2. Faster Closing Times: Without the need for employment verification, these loans often close in as little as 21 days.
3. Unlimited Portfolio Size: Conventional limits often cap you at 10 financed properties. DSCR loans allow you to scale infinitely.
4. Flexible Entities: You can close the loan under an LLC, protecting your personal assets.

Are You Eligible?

While we don’t need your tax returns, we do look for:

• Credit Score: Typically 660 or higher (though options exist for lower scores).
• Down Payment: Usually 20% to 25%.
• Appraisal: A Form 1007 is required to verify the market rent for the area.