If you have bad credit but want to invest in rental properties, a DSCR loan (Debt Service Coverage Ratio loan) could be your best financing option. Unlike traditional mortgages, DSCR loans focus on the property’s cash flow rather than your personal credit score.
In this guide, you’ll learn:
✔ What credit score is needed for a DSCR loan?
✔ How to qualify with low credit (even below 600)
✔ Best lenders for bad credit DSCR loans
✔ Tips to improve approval chances
Can You Get a DSCR Loan With Bad Credit?
Yes! While most traditional loans require a 680+ credit score, some DSCR lenders accept borrowers with:
- Scores as low as 580 (some even 500 with strong collateral).
- No income verification (since approval depends on rental income).
- Higher down payments (20-30%) to offset risk.
Minimum Credit Score for DSCR Loans by Lender Type
Lender Type | Minimum Credit Score | Down Payment | DSCR Requirement |
---|---|---|---|
Traditional Bank | 680+ | 20-25% | 1.25+ |
Private Lender | 620+ | 25-30% | 1.0+ |
Hard Money Lender | 500-580 | 30-35% | 0.75-1.0 |
5 Ways to Qualify for a DSCR Loan With Bad Credit
1. Choose the Right Lender
- Private lenders & portfolio lenders are more flexible than banks.
- Hard money lenders accept lower credit but charge higher interest.
- Mortgage brokers can connect you with niche DSCR loan programs.
2. Increase Your Down Payment
A larger down payment (30%+) reduces the lender’s risk, making approval easier.
3. Show Strong Rental Income (High DSCR)
- Aim for a DSCR of 1.25+ (more rental income than the mortgage payment).
- Use lease agreements & rent rolls to prove cash flow.
4. Add a Co-Signer or Partner
A co-borrower with better credit or additional assets can strengthen your application.
5. Offer Additional Collateral
- Pledge another property as security.
- Use cash reserves to reassure lenders.
Best DSCR Lenders for Bad Credit (2024)
- TrussFinancialGroup – Accepts 620+ credit, fast approvals.
- LendingOne – Works with investors (600+ FICO).
- Visio Lending – Specializes in rental loans (580+ credit).
- Local Hard Money Lenders – More flexible but higher rates.
FAQ: DSCR Loans With Bad Credit
❓ Can I get a DSCR loan with a 500 credit score?
Yes, but only through hard money lenders or private lenders (expect higher rates & fees).
❓ Do DSCR loans check tax returns?
No! They focus on property income, not your personal tax history.
❓ What’s the lowest DSCR ratio lenders accept?
Some lenders go as low as 0.75 DSCR, but 1.0+ is safer for approval.
❓ Can I refinance later with better credit?
Yes! Once your credit improves, you can refinance into a lower-rate DSCR loan.
Final Tips to Improve Approval Odds
✅ Fix credit errors (dispute inaccuracies on your report).
✅ Pay down other debts to improve debt-to-income (DTI).
✅ Find a strong co-signer if possible.
✅ Work with a mortgage broker who knows bad-credit DSCR loans.
🔑 Take the Next Step Toward Financial Freedom
Whether you’re purchasing your next rental or refinancing a cash-flowing property, a DSCR loan can help you scale faster with less red tape.
👉 Apply now with Truss Financial Group — your trusted DSCR loan experts.
📝 Click here to get started today
No tax returns. No stress. Just real funding for real investors.