Real estate investing can be a powerful way to build long-term wealth, but qualifying for a mortgage isn’t always straightforward—especially for first-time investors. Traditional loans often require income documentation, while personal debt-to-income (DTI) ratios can limit financing options.

That’s where Debt-Service Coverage Ratio (DSCR) loans may provide an alternative. Instead of relying on personal income verification, DSCR loans allow eligible borrowers to qualify based on a property’s rental income. This structure could be particularly beneficial for self-employed individuals, business owners, or those looking to expand their real estate holdings.

A DSCR loan may be an option if:

• You’re a first-time investor looking to purchase a rental property
• You’re self-employed or have non-traditional income sources
• You want to qualify based on property cash flow rather than personal income
• You’re looking for financing options that allow for portfolio growth

If you’re considering investing in your first rental property, here’s why a DSCR loan may be worth exploring.

1. Qualification May Not Require Traditional Income Documentation

Unlike conventional investment property loans, which often require W-2s, tax returns, and proof of personal income, DSCR loans focus on a property’s ability to generate rental income. Instead of reviewing employment history, lenders evaluate whether the property’s projected rent will cover the mortgage payment.

For self-employed borrowers, real estate investors with multiple properties, or those with non-traditional income sources, this could be a significant advantage. Without the need to prove stable W-2 income, more borrowers may qualify for financing.

2. A Streamlined Approval Process

Since DSCR loans prioritize a property’s income-generating potential, the approval process may be faster and more straightforward than a conventional mortgage. Lenders typically evaluate:

• The property’s potential rental income
• The borrower’s credit score and assets
• The Debt-Service Coverage Ratio (DSCR), which measures whether rental income can cover the mortgage payment
• By focusing on these key financial metrics, DSCR loans may provide investors with an efficient path to financing their next real estate purchase.

3. More Flexibility for Scaling a Rental Portfolio

For many first-time investors, one of the biggest challenges is figuring out how to scale their real estate portfolio while managing financing limitations. Traditional loans take personal income into account, which can create roadblocks if an investor already has multiple mortgages.

DSCR loans assess each property independently, meaning an investor’s ability to qualify isn’t necessarily tied to their personal financial profile. If the rental income from one property is sufficient to cover the loan, the investor may still qualify for financing on additional properties.

This structure makes DSCR loans particularly attractive for those who want to grow their rental portfolio over time without being restricted by personal DTI ratios.

4. Available for a Variety of Residential Investment Properties

At Movement, DSCR loans may be available for a range of residential investment properties, including:

• Single-family homes
• Condos
• 2-4 unit properties

For first-time investors, this flexibility may open up more opportunities to find a property that fits their investment strategy. Specific guidelines can change, so it’s important to check with a loan officer for specific requirements.

5. Potential for Long-Term Wealth Building

Investing in real estate can provide a steady stream of passive income while also allowing for long-term appreciation. While property values fluctuate, real estate historically tends to increase in value over time.

For first-time investors, DSCR loans can serve as a financing tool that allows them to get started sooner rather than later. Instead of waiting to meet conventional loan requirements, an investor may be able to enter the market and start building equity right away.

Your Next Steps

If you’re ready to explore your options and see if a DSCR loan aligns with your investment goals, connect with your Movement loan officer.

Note: Programs, Rates, Terms and Conditions are subject to change without notice. Attestation that property and loan funds are intended for investment purposes and neither borrower(s) or relative will occupy is required. Should not be construed as legal or financial advice. Consult with a financial advisor. Purchase, refinance, or cash-out refinance eligible.