INVESTOR GUIDE · NO-RATIO DSCR
No-ratio DSCR loans
Financing when the rent doesn’t cover the payment. High HOA dues, high taxes and insurance, or low rents can sink a DSCR. A no-ratio loan takes the ratio out of the equation.
The short answer
- A no-ratio loan is for a property that doesn’t debt service on its own.
- The lender lowers leverage, typically to around 70% LTV, and the DSCR requirement goes away.
- Qualifying comes down mainly to the credit of the personal guarantor.
WHO IT’S FOR
Properties that don’t debt service
Some properties don’t cover their own payment: an area with high HOA fees, rents that lag the price, or taxes and insurance that eat the cash flow. On a standard DSCR loan, that kills the deal. On a no-ratio loan, it doesn’t matter.
HOW IT WORKS
Lower leverage replaces the ratio
With a no-ratio loan, the DSCR is non-consequential. The lender lowers the loan-to-value, typically to around 70%, which kicks out the requirement to debt service, and you get the loan regardless of the ratio. What carries the deal is credit: the lender is lending mainly on the strength of the personal guarantor.
WHERE IT FITS
Standard, low-ratio and no-ratio
- 1.00+ DSCR: the standard benchmark, qualifies with every DSCR program we work with
- 0.75 to 0.99: low-ratio programs
- Below 0.75: no-ratio, at lower leverage
See where your deal lands in our DSCR calculator, and the full tiers in our DSCR loan requirements.
STRAIGHT ANSWERS
No-ratio DSCR questions
What is a no-ratio DSCR loan?
A DSCR loan with no debt service requirement. The lender doesn’t require the rent to cover the payment and offsets that risk with lower leverage, typically around 70% LTV.
How much can I borrow on a no-ratio DSCR loan?
Typically around 70% of the property’s value, lower than a standard DSCR loan.
What matters most on a no-ratio loan?
Credit. With the ratio out of the picture, the lender is lending mainly on the credit strength of the personal guarantor.
KEEP READING
DSCR KINGS · INVESTOR FINANCING
Rent doesn’t cover the payment? Let’s look at it
Send us the property, the rent and your credit range. We’ll tell you whether low-ratio or no-ratio fits.
Business-purpose loans for investment properties only; not for owner-occupied homes. Lending guidelines, leverage and loan programs vary by lender and by state and are subject to change. Terms and approval depend on the property, the borrower’s credit and capital-partner guidelines and are not guaranteed. Examples are for illustration only.
