Introduction to DSCR Loans

If you’re self-employed and looking to invest in real estate, a Debt Service Coverage Ratio (DSCR) loan could be your key to success. Unlike traditional loans that require detailed income documentation, a DSCR loan qualifies you based on the income generated by the property itself. This means your investment’s potential, not your personal income, determines your eligibility.


Why DSCR Loans are Ideal for Self-Employed Investors

For many self-employed individuals, tax strategies often minimize reported income, making it difficult to qualify for conventional loans. DSCR loans offer a practical solution:


How DSCR Loans Work

A DSCR loan measures the property’s ability to cover its debt obligations. Here’s how it breaks down:


Practical Application:

To fully understand how a DSCR loan can benefit self-employed investors, let’s dive into a real-world scenario.


Case Study: Investing in a Rental Property

Imagine you’re a self-employed consultant, and you’ve identified a rental property that seems promising. The property is a duplex in a desirable neighborhood, with each unit renting for $1,000 per month. Here’s how you would evaluate this opportunity using a DSCR loan.

Step-by-Step Process:

Assess the Property’s Income:


Monthly rental income: $2,000 (2 units x $1,000 each)

Calculate Monthly Expenses:


Mortgage payment: $1,200

Property taxes: $200

Insurance: $100

Maintenance and other costs: $100

Total monthly expenses: $1,600


Determine the DSCR:

DSCR = Monthly rental income / Monthly expenses

DSCR = $2,000 / $1,600

DSCR = 1.25


This DSCR of 1.25 means the property generates 25% more income than is required to cover its monthly debt obligations. Most lenders require a DSCR of at least 1.2, so in this case, you would likely qualify for a DSCR loan.


Financial Stability

Using a DSCR loan also provides stability. Let’s say you opt for a fixed-rate DSCR loan. Your mortgage payments remain constant, unlike an adjustable-rate mortgage that can fluctuate with market conditions. This predictability helps in planning your finances and ensuring the property continues to be a profitable investment.

Example Analysis:

Scenario Without DSCR Loan: If you were to apply for a traditional loan, your self-employment income might not meet the lender’s criteria, especially if you have significant business write-offs. This could lead to higher interest rates or even loan denial.

Scenario With DSCR Loan: Since the loan is based on the rental income, the property’s performance, not your self-employment income, is the primary factor. This increases your chances of approval and might even secure you better loan terms.


Getting Started

Partnering with a lender who understands DSCR loans and investment properties is crucial. Our preferred lender, Brendan Kolesar, specializes in these loans and can guide you through the process efficiently.

You can contact Brendan Colesar at 916-541-1808 or For further assistance, reach out to us at or check out our website to request an annual review.


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Ocala, Florida

Unemployment Rate: 4%
Recent Job Growth: 3.4%
Median Income: $46,798
Population: 360,000
Population change since 2010: Up 38%

Median Home Price: $172,000
Vacancy Rate: 5.2%
Average Commute: 25 min
Average Temp: 43-91
Ocala, a small agricultural and manufacturing center, is about halfway between Gainesville to the north and Orlando to the southeast. With its attractive tree-lined streets and Old South–style homes, it more resembles a typical Southern city than a Florida city or beach town. Ocala is the capital of Florida’s thoroughbred industry, and ranching and horse-breeding are popular


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    • Located in the heart of central Florida, there is easy access to attractions found all around the state. Ocala also houses many attractions of its own, including The Appleton Museum of Art, Fort King National Historic Park, and Silver Springs State Park.

    • Job growth increased by 3.4% in 2016, and continues to do so. There are many employment opportunities in manufacturing, healthcare, and sales. The presence of Lockheed Martin, provides many jobs in the manufacturing of advanced technology.