For real estate investors
DSCR Loans in Michigan
A debt-service coverage ratio (DSCR) loan is for investment property only. The lender weighs the property’s rent against its full monthly payment instead of your personal income or employment history. If the property's rent covers its payment, it may qualify without your tax returns or W-2s.
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DSCR Loan
Key benefits
Qualified on the Rent
The property's rent is weighed against its payment instead of your personal income.
Room to Grow a Portfolio
Each property is judged on its own rent rather than your personal debt ratio.
Interest-Only Options
Some programs offer an interest-only period, which lowers the early payment but pays down no principal.
DSCR against a conventional investment loan
Both buy rentals. One asks what you earn, the other asks what the property earns. For an investor with several properties that difference decides whether you can keep buying at all.
| Requirement | DSCR | Conventional investment |
|---|---|---|
| What actually qualifies you | The rent against the property's own payment. Your salary is not part of the calculation. | Your personal income and debt ratio, including every mortgage you already hold. |
| Tax returns | Not required. | Required, usually two years, and write-offs work against you. |
| How many properties you can hold | No conventional cap. Investors use it precisely because they have run out of room. | Financing tightens after a handful and stops entirely at ten. |
| Buying inside an LLC | Normal and expected. | Generally not permitted. The loan is in your name. |
| Money held back after closing | Reserves are expected, commonly several months of payments per property. | Reserves apply too, but tied to your overall profile. |
| Short-term rental income | Often usable, with documented history or a market rent schedule. | Rarely usable. |
Run the numbers on a property
Guidelines
Guidelines for this loan
What DSCR lenders usually check. Each lender sets its own minimums, so treat these as a starting point.
Credit Score
680+ preferred.
Read the guideDSCR
Usually 1.0 or higher; some lenders go lower with more down or reserves.
Read the guideProperty Types
1 to 4 units, condos, and non-warrantable properties allowed.
Read the guideDown Payment
Larger than on a home you live in, and set by each lender.
Read the guideDSCR Calculator
A DSCR loan qualifies on the property, not on your personal income. Enter the rent and the numbers below to see the coverage ratio a lender would measure.
The property
Rent is normally taken from the signed lease, or from the appraiser's rent schedule when the unit is vacant. Coverage is measured against the full payment including taxes, insurance and association dues.
Most DSCR programs look for 1.00 or higher, with better pricing at 1.25 and above. Some allow a lower ratio with a larger down payment or reserves. Minimums are set by each lender.
- Loan amount
- $0
- Principal & interest
- $0
- Taxes, insurance, HOA
- $0
- Total monthly payment
- $0
- Monthly cash flow
- $0
Coverage is gross rent divided by the full monthly payment.
Estimates only, for illustration. Not a loan commitment, an offer of credit, or a rate quote. Actual figures depend on underwriting, credit, income, assets, appraisal and property eligibility. Align Lending LLC, NMLS #2041154, is an independent mortgage broker and does not lend directly. Equal Housing Opportunity.
Questions about this loan
If yours is not here, ask it on the call. There are no dumb questions.
How is the DSCR ratio calculated?
Divide your property’s gross monthly rental income by the total monthly mortgage payment (PITI). Many lenders look for a ratio of at least 1.0, and each sets its own minimum.
Can I still qualify if the property does not quite cover itself?
Some lenders may allow DSCR below 1.0 with strong reserves, but it’s less common.
Do I need a signed lease already in place?
Not always. For a property that is already rented, the lender usually uses the signed lease. For a vacant unit or a new purchase, it uses the appraiser’s market rent schedule instead.
Does it matter how many properties I already own?
Less than it does on a conventional loan, which stops at ten financed properties. DSCR lenders judge each property on its own rent, though most set their own limits on total exposure and expect reserves for each property.
Can I use short-term rental income?
Yes, in many cases, so long as documented income supports the DSCR ratio.
Does Michigan change the numbers on a rental?
Yes, in the tax line. The year after a Michigan home sells, its taxable value resets to half of the assessor’s market value, so the seller’s tax bill is not your tax bill. A rental also pays the non-homestead rate, which adds the school operating millage a home you live in does not pay, and that full figure goes into the payment the rent has to cover. Estimate the tax for an address with the non-homestead rate before you run the ratio.
What our clients say
I highly recommend Align Lending to anyone looking for a mortgage broker in Southeast Michigan. The team was knowledgeable, responsive, and easy to work with.
Can’t say enough great things about Samantha and her team at Align Lending! Highly recommend
Individual experiences. Results vary.
Ask Samantha whether this loan fits
Bring the property, its expected rent and its tax bill. Samantha will run the coverage ratio with you and tell you what lenders will want to see.
- 1
Tell us what you are trying to do
Not what product you want. What you are actually trying to accomplish.
- 2
We look at your situation
Samantha works out what matters most for you specifically.
- 3
You leave with a plan
Your options, the tradeoffs, and your next step. No obligation to go further.
Start with your question
All calculators and toolsAlign Lending LLC, NMLS #2041154, is a mortgage broker. Samantha Shelton, NMLS 1647301. Equal Housing Opportunity. Licensed in Michigan, Ohio, North Carolina, Florida, Louisiana and Texas. Program guidelines on this page are general and change over time; they are not a credit decision, a preapproval, a commitment to lend, or an offer of credit. Approval depends on your full application, the property and the lender's current guidelines.
