If you’re a first-time real estate investor, securing financing can feel overwhelming—especially if you don’t qualify for traditional loans. That’s where DSCR loans (Debt Service Coverage Ratio loans) come in!
Unlike conventional mortgages that focus on your personal income, DSCR loans evaluate the rental property’s cash flow, making them ideal for new investors.
In this ultimate guide, you’ll learn:
✔ What is a DSCR loan & how does it work?
✔ DSCR loan requirements for first-time investors
✔ How to qualify even with no prior experience
✔ Best lenders (including #1 choice for beginners)
✔ Step-by-step application process
✔ Pro tips to maximize approval chances
Let’s dive in and unlock your real estate investing potential!
What Is a DSCR Loan? (Beginner-Friendly Explanation)
A DSCR loan is a mortgage designed specifically for rental property investors. Instead of checking your W-2s or tax returns (like traditional loans), lenders look at:
✅ The property’s rental income (not your salary)
✅ Debt Service Coverage Ratio (DSCR) – Does the rent cover the mortgage?
✅ Your credit score & down payment
Why DSCR Loans Are Perfect for First-Time Investors
- No income verification – Great if you’re self-employed or have a day job
- No prior landlord experience required (with some lenders)
- Faster approvals than conventional loans
- Build wealth without draining personal savings
DSCR Loan Requirements for First-Time Investors
While easier to qualify for than traditional loans, DSCR loans still have requirements:
1. Minimum Credit Score
- 620+ (most lenders)
- 580-620 (some private lenders, like Truss Financial Group)
- 500-580 (hard money lenders, higher rates)
📌 Pro Tip: If your credit is below 620, consider:
- Adding a co-signer
- Making a larger down payment (25-30%)
2. Down Payment Requirements
| Lender Type | Min. Down Payment |
|---|---|
| Traditional Banks | 25-30% |
| Private Lenders (e.g., Truss Financial Group) | 20-25% |
| Hard Money Lenders | 30-35% |
3. Debt Service Coverage Ratio (DSCR) Requirement
Lenders calculate:
DSCR = Net Operating Income (NOI) / Annual Mortgage Payments
- DSCR ≥ 1.0 = Minimum for approval
- DSCR ≥ 1.25 = Better rates & terms
📌 Example:
- Rental Income: $2,500/month ($30,000/year)
- Expenses: $500/month ($6,000/year)
- NOI: $24,000/year
- Mortgage Payments: $20,000/year
- DSCR = $24,000 / $20,000 = 1.2 (Approved!)
4. Property Requirements
- Must be an investment property (not primary residence)
- Leases in place preferred (or strong rental comps)
- Good condition – No major repairs needed
5. Reserve Requirements
Many lenders require 6-12 months of mortgage payments in reserves.
Best DSCR Lenders for First-Time Investors
🥇 #1 Choice: Truss Financial Group
Why They’re Great for Beginners:
✅ Credit scores as low as 580 accepted
✅ Down payments starting at 20%
✅ No prior landlord experience required
✅ Fast approvals (as little as 10 days)
👉 Get Pre-Approved Now:
Apply with Truss Financial Group
Other Top Lenders
| Lender | Min. Credit Score | Min. Down Payment | Best For |
|---|---|---|---|
| Kiavi | 620 | 20% | Online Process |
| LendingOne | 600 | 25% | New Investors |
| Visio Lending | 580 | 25% | Long-Term Rentals |
| Hard Money Lenders | 500 | 30% | Low Credit |
How to Apply for a DSCR Loan (Step-by-Step)
Step 1: Check Your Credit Score
- Aim for 620+ (or 580+ for Truss Financial Group)
- Dispute any errors on your report
Step 2: Save for a Down Payment
- 20-25% is ideal for best rates
Step 3: Find the Right Property
- Look for strong rental demand
- Get a rental estimate from a property manager
Step 4: Choose a Lender
- Compare at least 3-5 lenders
- Truss Financial Group is our top pick for beginners
Step 5: Submit Your Application
- Typical timeline: 2-4 weeks
- Faster with private lenders
5 Tips to Get Approved as a First-Time Investor
1️⃣ Start with a Single-Family Home (easier to finance than multifamily)
2️⃣ Show Strong Rental Comps (proof the property will cash flow)
3️⃣ Work with a Local Mortgage Broker (they know lender quirks)
4️⃣ Consider a Co-Signer if your credit is borderline
5️⃣ Use a Property Manager (some lenders like seeing this)
FAQ: DSCR Loans for First-Timers
❓ Can I get a DSCR loan with no real estate experience?
✅ Yes! Many lenders (like Truss Financial Group) don’t require prior experience.
❓ Do I need to own other properties to qualify?
❌ No. DSCR loans are great for your first investment property.
❓ What’s the biggest mistake first-time investors make?
⚠️ Underestimating expenses – Always budget for vacancies, repairs, and maintenance.
❓ Can I use a DSCR loan for a fixer-upper?
❌ No. These loans are for rent-ready properties only.
🚀 Ready to Start Investing? Get Your DSCR Loan Today!
As a first-time investor, a DSCR loan is your ticket to building wealth through real estate—without jumping through traditional mortgage hoops.
Why wait?
👉 Get pre-approved in minutes with our #1 recommended lender:
Apply with Truss Financial Group Now