A Comprehensive Guide to the Best DSCR Lenders
As we step more into 2024, the mortgage market continues to develop to meet the diverse needs of borrowers, such as real estate investors and the self-employed. Lenders are now offering innovative solutions and competitive terms to empower investors to pursue their ventures with confidence. Debt-service coverage ratio (DSCR) loans are one of many new lending tools available on the market. They’re getting increasingly popular amongst real estate investors, with roughly half of the 201,000 non-QM loans rated by S&P Global Ratings between 2018 and February 2023 being DSCR loans.
Whether you’re a seasoned real estate investor or just starting out on your journey, finding a good DSCR lender can help you secure a new investment property on the right foot. In this article, we’ll be exploring the top 15 DSCR lenders to help you find your next lending partner in your real estate venture.
What is a DSCR Loan?
A DSCR loan, short for a debt-service coverage ratio loan, is a type of mortgage that focuses on the property’s income-generating potential. Borrowers can qualify for a DSCR loan based on the rental income a property can produce, rather than their personal W2s, pay stubs, or tax returns. Using the DSCR metric, lenders can gauge the borrower’s ability to repay the loan using the property’s rental income.
Here’s how the DSCR metric is calculated:
A DSCR figure that’s above 1.0 means that a property generates just enough income to cover its debt service. A strong DSCR is typically considered to be 1.25 or above, but some lenders have much lower or even no ratio requirements.
Who Would Be a Good Candidate for a DSCR Loan?
DSCR loans can be a valuable tool for anyone who is looking for financing on an income-producing property. This could include, but is not limited to:
- Real estate investors
- Self-employed investors
- Individuals with a non-traditional income
- Entrepreneurs
- Business owners
- Aspiring real estate investors looking to build their portfolio
- Property developers
How Was This List Formed?
This list was formed by considering several factors to help determine who the best DSCR lenders are in the industry, including the experience of employees, good reviews, rate transparency, awards, overall brand message, and more. Please note that this list is in no particular order.
The Top 15 DSCR Lenders of 2024
1. Angel Oak Mortgage Solutions
Angel Oak Mortgage Solutions helps make homeownership possible for underserved borrowers by offering various loan options. They specialize in both traditional mortgages and non-QM loans, which can be a good fit for borrowers with unique financial situations.
Angel Oak’s DSCR loan options include the following terms:
- Minimum FICO of 680
- Max LTV of 85%
- Minimum loan value of $100,000
- Maximum loan value of $3m
- Properties can be owned by an LLC
- Vacant properties allowed
- Short-term rentals allowed
They also offer additional non-QM loans, including self-employed loans, asset qualifier, closed-end second mortgages, and jumbo home loans.
According to Scotsman Guide, they were one of the Top 3 Non-QM originators in 2023, with a total of $3.3 billion in total non-QM volume.
2. Truss Financial Group
Truss Financial Group was founded in 2006 by Jeff Miller and Jason Nichols, who currently serve as the CEO and CMO, respectively. They’re based in Orange County and have over 20 years of experience helping real estate investors with DSCR loans, even through the tumultuous 2008 financial crisis. They’ve been on the Inc. 5000 list as one of the fastest growing businesses in California twice – and for good reason: they’ve been serving their customers well for decades.
Their primary target market are self-employed business owners. In addition to DSCR loans, their other offerings include stated income mortgages, bank statement mortgages, jumbo reverse loans, bridge loans, and more.
Truss offers flexible financing, with a DSCR ratio of 0 available to borrowers with a high FICO score and at least 25% equity. Their application doesn’t require tax returns or any personal income information.
3. Lima One Capital
Lima One is a private lending company that provides funding for rental properties, new construction builds, fix-and-flip projects, and multifamily investments all across the United States. Headed by CEO Jeff Tennyson, they have decades of experience in the mortgage industry with a primary focus on non owner-occupied properties. They have headquarters in Greenville, South Carolina and an office in Irvine, California.
4. Griffin Funding
Griffin Funding was founded in San Diego in 2013 and they primarily serve veterans, self-employed business owners, and real estate investors. They also have a wide variety of more conventional loan options, such as conventional, FHA, and USDA loans.
Last year, in 2023, Griffin Funding achieved a three-year revenue growth of 216% and was listed as number 2,524 in the 2023 Inc. 5000. With mortgage loan origination taking such a hard hit in 2023, Griffin Funding was still able to carve out a niche in the non-QM space.
Their stated terms for DSCR loans include:
- Minimum DSCR of 0.75, with an average of 1.05
- Minimum credit score of 620
- Minimum loan amount of $100,000
- Appraisal required
They currently offer DSCR loans in all 50 states with the exception of Minnesota, North Dakota, Rhode Island, South Dakota, and Utah. If you live in any of those states, you may want to look into other options.
5. Kiavi
Kiavi is one of the nation’s largest private lenders to residential real estate investors. Headed by Arvind Mohan, the company has funded more than $16 billion in loans. Their stated goal is to help customers revitalize the $25 trillion worth of aged U.S. housing stock to provide move-in ready homes and rental properties for millions of Americans across the country.
Accordingly, they mainly offer fix and flip loans, bridge loans, and new construction loans. However, they offer DSCR loans as well at competitive rates (as low as 6.75% according to their website). Other terms include:
- Up to 80% LTV
- No prepayment penalty after 3 years
- Multiple ARM options
- Interest-only options
- 30-year fixed rate options
Kiavi was formerly known as LendingHome, but they’ve since undergone a rebranding to focus more on utilizing technology to offer real estate investors a faster way to access capital.
6. New Silver Lending
New Silver Lending is a hard money fintech company that offers fix and flip, rent (DSCR), and ground up loans. Their interest rates range from 10-13.25%, but the interest rates on their DSCR product are a bit lower. Other terms include:
- Minimum loan amount of $150,000
- Maximum loan amount of $3,000,000
- Minimum FICO of 660
- Up to 80% of LTV
- Origination fee of 2-3%
However, they aren’t available in a number of states in the US, including: Alabama, Arkansas, Arizona, Idaho, Minnesota, Nevada, North Dakota, Oregon, South Dakota, Utah, and Vermont.
7. Defy Mortgage
Defy Mortgage is bringing some bold, innovative energy to the mortgage game for non-traditional borrowers. Their experienced team specializes in helping real estate investors build their empire and establish their legacy with tailored loan solutions customized to meet each investor’s unique needs. They break down barriers for both buying and refinancing, making the process smoother and more secure.
That cookie-cutter, one-size-fits-all approach? Not their style. Defy is driven by a passion to challenge the status quo and create a new era of lending that puts the power in the hands of borrowers. Talk about setting new standards in the industry.
Defy’s CEO, Todd Orlando, is an experienced banker who isn’t afraid of defying the traditional in the financial services space. Recognizing that the number of self-employed individuals is at an all-time high, Defy is dedicated to specializing in non-QM loans to help non-traditional borrowers achieve their goals – and that includes DSCR loans. And the best part? They close fast and make it easy.
Here’s a little bit more info on Defy’s DSCR loans:
- Up to 85% LTV (about 5% higher than the industry average)
- Minimum FICO of 620
- NO Max Loan Amount
- ARM/Fixed Options
- Interest Only Option Available
- DSCR Ratio of 0.75
- Qualify using exclusively rental income
8. Visio Lending
Visio Lending is headquartered in Austin, Texas and was founded in 2012. They specifically target real estate investors in the rental market, offering rental loans, vacation rental loans, permanent rental loans, and transitional rental loans.
Headed by Jeff Bank, who previously served as an executive at JP Morgan, they’ve originated almost $3 billion in loans over the past fifteen years and they operate in 38 states across the US. Of their $2.8 billion worth of originations, almost one-third are specifically for vacation rentals (about $821m). If you’re looking for a loan on a vacation property, Visio Lending is a reliable option.
However, their DSCR loans in particular offer the following terms:
- 5/4/3/2/1 prepayment penalty structure: If the loan is paid off in full during the first year, you pay a 5% penalty; second year, a 4% penalty, and so on.
- No personal debt-to-income or tax returns required.
- Full 30-year terms with no balloon payments.
9. North American Savings Bank
North American Savings Bank is a popular, full-service bank located in Kansas City, Missouri. Their mortgage options include conventional, FHA, VA, and non-QM loans – including DSCR loans. North American Savings Bank’s assets total over $2 billion. NASB’s customer satisfaction rating on Zillow is 4.96 out of 5, indicating that most borrowers are very happy with their service.
North American Savings Bank offers a variety of residential and commercial invesment loans, including construction and development loans, IRA non-recourse loans, DSCR loans, investment property loans, and more.
Their DSCR loans have the following terms and benefits, which are a bit more restrictive than industry averages – but still pretty good:
- No personal income documents required.
- DSCR minimum of 1.0 (which is quite a bit higher than the industry average; Defy’s is currently 0.75).
- Up to 80% max loan-to-value.
- Minimum 700 FICO score.
- 1-2 Family properties are eligible.
- No prepayment penalty.
- Minimum loan amount of 750.
Their requirements for short-term DSCR loans are the same: they don’t offer funding for 1-4 unit residential properties according to the stated terms on their website, and their DSCR and credit score requirements are a bit higher than the norm.
However, they’re an established lender with a dedicated history of serving their clients well.
10. A&D Mortgage
Initially founded in 2005, A&D Mortgage successfully steered their company through the ups and downs of the 2008 financial crisis. Today, they’re one of the direct-to-consumer lenders in the industry. Although their business initially started out as a retail-only lender, they expanded their business to become non-QM lenders in 2015 after seeing the explosion of the gig economy and the self-employed.
- 1007 (single-family comparable rent schedule) only for rental income.
- DSCR as low as 0, which is lower than the industry average of 0.75.
- Up to 70% LTV.
- Minimum FICO of 620.
- Mixed-use and 1-8 unit properties are allowed.
With a 0 DSCR ratio allowed, A&D Mortgage is one of the most flexible lenders when it comes to no ratio DSCR loans. They also boast some of the fastest turnaround times in the country, with a target application-to-close timeline of only five days.
11. BrightPathLoans
BrightPathLoans specializes in mortgages for real estate investors, offering hard money loans, DSCR loans, ground-up loans, fix-and-flip loans, long-term rental loans, and short-term rental loans.
They are one of the top mortgage providers for investors in Georgia, serving many of the properties in the Atlanta metro. Their hard money loans boast an 85% approval rate. Their DSCR loans have an average DSCR of above 1.25, and their turn times for capital generation are among the most competitive in the industry, with the ability to deliver in under 48 hours.
Some of their DSCR specific requirements, terms, and benefits include:
- 1.0 – 1.2 minimum DSCR ratio.
- 80% LTV.
- No personal income documents required (no personal income checks, no paystubs, no tax returns).
They’ve been serving the non-QM market since 2004, and they’ve grown to be one of the nation’s largest non-QM lenders.
12. JMac Lending
Founded by Christina Pham in Santa Ana, California, JMac Lending is one of the top non-QM lenders in the United States, having originated more than 40,000 loans since their inception in 1997. They currently offer conforming, government, jumbo, and non-QM loans.
However, for consumers, they’re one of the more restrictive non-QM lenders, offering loans only in California, Colorado, Georgia, Illinois, New Jersey, Texas, Virginia, and Washington. Some of the stated non-QM terms on their website include the following:
- Loans from $75k to $2m.
- Minimum FICO of 660.
- Minimum DSCR of 0.75.
- Maximum LTV of 65%.
13. NewFi
NewFi Lending is based out of Emeryville, California. They’ve been listed as one of Inc. 5000’s Fastest Growing Companies in the United States, one of San Francisco Business Time’s Fastest Growing Companies in the Bay Area, and one of National Mortgage New’s 2023 Best Mortgage Companies to Work For.
For their DSCR loans in particular, they offer funding in 40 states. Some of their terms include:
- Up to an 80% LTV
- Minimum FICO of 640.
- Minimum loan amount of $100k.
- Maximum loan amount of $3.5m.
- At least 12 months of established homeownership / real estate experience.
- Residential property of 1-4 units required.
They also offer 30 and 40 year interest only options.
14. JVM Lending
JVM Lending was founded in 2006 by Jay Voorhees and Heejin Kim. They were both top-producing loan officers before starting JVM Lending. When the financial crisis hit in 2008, JVM focused on much more stringent hiring and training practices.
Today, JVM Lending is one of the top lenders for non-QM loans, offering DSCR loans with the following terms and benefits:
- DSCR Ratio of 0 allowed (but the property must be generating income)
- Minimum 620 FICO
- Must currently own a primary residence
They don’t offer DSCR loans in the following states: Colorado, Minnesota, North Dakota, Nevada, Oregon, Puerto Rico, South Dakota, Utah, Virginia, and Vermont.
15. American Heritage Lending
American Heritage Lending offers fix and flip, DSCR, refinance, and bridge loans. They primarily target real estate investors who have unique circumstances that aren’t served by conventional lenders.
They offer DSCR loans on condos, townhomes, multifamily properties of 2-4 units, and single-family homes. Their loan amounts range from $75,000 to $2m. Their website doesn’t state any minimum DSCR or credit score requirements, but they likely follow industry standards of 0.75 and 650, respectively.
Conclusion: Top 15 DSCR Lenders of 2024
DSCR loans allow borrowers to qualify for financing using the property’s income rather than their own personal income. Since the property itself is generating an income stream and can be used as collateral, borrowers can receive very competitive financing.
Industry guidelines for a DSCR loan usually require the borrower to have a minimum FICO of 620 to 650, with a minimum loan amount of $100,000, minimum DSCR of 0.75, and a minimum down payment of at least 20%.
Defy Mortgage offers some of the most competitive DSCR terms with top-notch service and speed. Defy was founded in 2023 to help underserved borrowers with unique financial situations establish their legacy and unlock their dreams of homeownership, paving a path to unlocking generational wealth.
