As we enter 2026, there is still a lot of demand for long-term rental loans. The loan-brokers market is worth more than $319 billion, and more than ever investors are moving from rapid flips to long-term holds. Brokers who know how to work with DSCR loans and other private financing structures have a genuine edge over their competitors. As 30-year mortgage rates settle at 6.15% in late 2025, cash-flow-based lending is still attractive to investors who want funding that is easy to predict and work with.
At the same time, many serious investors are being turned down by traditional lenders because their personal income doesn't meet classic DTI models. This is especially true for self-employed clients who have a lot of cash flow but non W-2 income. DSCR loan programs fill that gap by focusing on property income instead of personal income to determine loan approval. But there are still trade-offs with these loans to be aware of. Brokers who know the pros and cons of DSCR financing are better able to help clients choose the right products for their client’s deals.
Debt service coverage ratio products evaluate rental property cash flows against debt obligations rather than borrower income documentation. The formula takes the gross rental revenue from a property and divides it by the total expense of owning and operating that property (PITIA: Principal, Interest, Taxes, Insurance, and Association fees).
Formula: DSCR = Gross Rental Income ÷ PITIA
Example calculation:
A 1.25 ratio means that the property makes 25% more money than it needs to pay off its debts. This gives lenders a cash flow cushion that protects them against missed payments.
Most lenders want a minimum DSCR of 1.0 to 1.1, although some may accept a ratio as low as 0.75 for good borrowers who are willing to cover negative cash flows from other sources of income.
Put this packet together before submission to speed approvals and reduce conditions.
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Advantages |
Disadvantages |
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No Personal Income Documentation - W-2s, tax returns & pay stubs are unnecessary; qualification is based purely on property performance |
Higher Interest Rates - Typically 0.5-1.5% above conventional rates, reflecting increased lender risk |
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Unlimited Portfolio Growth - No conventional lending caps; qualify for additional properties regardless of existing holdings |
Larger Down Payments Required - Standard 20-25% minimum vs. 15-20% conventional, increasing capital requirements |
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Faster Approval Processes - Streamlined underwriting without extensive income verification; decisions within 24-48 hours are typical |
Minimum Loan Amounts - Usually $100,000-$150,000 floor, excluding smaller property acquisitions |
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Self-Employed Friendly - Ideal for business owners with complex tax structures, minimizing reported income |
Rental Property Limitation - Owner-occupied properties ineligible; strictly investment property financing |
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Credit Flexibility - Minimum scores typically 660-680 vs. 700+ conventional requirements |
Vacancy Risk Exposure - Property must generate consistent income; extended vacancies threaten payment capability |
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Entity Closing Available - LLC ownership structures acceptable, providing liability protection |
Higher Origination Fees - Costs typically 1-3% vs. 0.5-1% conventional, increasing transaction expenses |
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Multiple Property Types - Single-family, multifamily, condos, and short-term rentals are all eligible |
Prepayment Penalties Common - Many programs include 1-3 year prepayment restrictions limiting refinancing flexibility |
Business owners generally have very little taxable income because they use legal ways to deduct expenses while managing their businesses. Standard underwriting sees these borrowers as high-risk, even though they have a lot of cash flow and a highly-valuable asset portfolio.
DSCR lending mitigates these conditions by not taking personal income into account at all. A contractor who makes $60,000 a year and owns rental units that bring in $150,000 in gross rents easily qualifies with DSCR underwriting.
Depending on the lender's standards, conventional lending usually limits investors to 4 to 10 funded properties. These restrictions make it hard for experienced investors with solid track records who want to keep growing.
There are no limits on the number of portfolios you can own with DSCR loans. Each property is evaluated on its own, depending on its performance, which means that investors can scale up as much as they like as long as they keep solid property-level criteria.
International purchasers who don't have a U.S. credit record or proof of income in the U.S. often face significant challenges in obtaining traditional financing. DSCR programs look at cash flows from properties instead of the borrower's credit history, which makes it possible for foreign investors to get involved.
Conventional underwriting has a hard time with properties that make money through Airbnb, VRBO, or similar sites. DSCR loans allow these tactics by employing predicted rental income based on market data and appraisal analysis.
As investors keep buying and selling into early 2026, DSCR loans are a big chance for brokers who work with customers who don't get enough help from traditional underwriting. Review your list of investors who have had trouble obtaining DTI-based approvals and present DSCR financing as a viable option, not a last resort. Check out RCN Capital's broker resources and loan programs on our website to learn more about available options and better serve these clients.
RCN Capital has a wide range of DSCR financing solutions that may meet the needs of different investors and types of property. We have funded over 37,000 transactions since 2010, which has given us a lot of experience with DSCR throughout all market cycles.
Program highlights include:
Our broker partnership strategy includes full DSCR training through the Amplify training platform, which will allow you to confidently sell these products to the right clients.
RCN Capital gives brokers an edge over the competition by offering rental-focused financing choices like DSCR long-term programs, bridge-to-permanent pathways, and multi-property solutions. Our white-labeled BLN portal makes it easier to submit forms, protects your brand, and lets you make decisions faster for clients who need them quickly and clearly. Visit the RCN Capital Broker Page to learn more about the benefits and the resources we offers to lending partners.