Investment Property Loans & DSCR Financing
Whether you're buying your first rental, refinancing a cash-flowing property, or scaling a portfolio — CFC offers full-documentation investor loans and DSCR financing that qualify on the property's income, not yours.
Serving real estate investors throughout Florida, South Carolina & Tennessee. Single-family, multi-unit, condos, and short-term rentals.
Full-Doc Investor Loans vs. DSCR — Which Is Right for You?
Investment property financing comes in two primary forms at CFC. The right choice depends on how your income is documented, how many properties you own, and your long-term portfolio strategy.
Full-Documentation Investor Loans
Conventional / Fannie Mae / Freddie Mac investment guidelines
Full-doc investment loans follow conventional underwriting guidelines — income is verified with W-2s, tax returns, and pay stubs. Rental income from the subject property (and existing rentals) is factored into qualifying income using Schedule E or a lease agreement. These loans offer the lowest rates available for investment properties and are ideal for W-2 earners or borrowers with clean, documentable income.
- W-2, tax returns, and pay stubs required
- Rental income counted at 75% of gross rent (vacancy factor)
- Up to 10 financed properties (Fannie Mae guidelines)
- Minimum 15–25% down depending on unit count
- Best rates available for investment properties
- Fixed and ARM options — 15, 20, 30-year terms
- Single-family, 2–4 unit, condos, and townhomes
- Cash-out refinance up to 75% LTV
DSCR Loans (Debt Service Coverage Ratio)
Non-QM investor financing — no personal income required
DSCR loans qualify the borrower based entirely on the property's rental income relative to its debt obligations — your personal income, employment, and tax returns are irrelevant. If the property cash flows, it qualifies. This is the go-to product for self-employed investors, those with complex income, or anyone building a large portfolio without the friction of personal income documentation.
- No personal income, W-2, or tax returns required
- Qualifies on property cash flow: Rent ÷ PITIA = DSCR
- DSCR as low as 0.75 on select programs
- LLCs and entities allowed as borrowers
- No limit on number of financed properties
- Short-term rentals (Airbnb / VRBO) eligible
- Interest-only options available
- Loan amounts up to $3M+
How DSCR Underwriting Works — Step by Step
The Debt Service Coverage Ratio is a single number that tells a lender whether a rental property generates enough income to cover its own mortgage payment. Here's exactly how it's calculated and what lenders look for.
The DSCR Formula
| DSCR Ratio | What It Means | Lender View | Typical LTV Allowed |
|---|---|---|---|
| Below 0.75 | Rent covers less than 75% of payment | Very limited programs; higher rate | Up to 65% LTV |
| 0.75 – 0.99 | Rent covers 75–99% of payment | Select programs available; higher rate | Up to 70–75% LTV |
| 1.00 | Rent exactly covers payment (break-even) | Widely available; standard pricing | Up to 75–80% LTV |
| 1.10 – 1.24 | Rent covers 110–124% of payment | Strong; better rates and terms | Up to 80% LTV |
| 1.25+ | Rent covers 125%+ of payment | Excellent; best rates and max LTV | Up to 80–85% LTV |
What Counts as "Rent" in the DSCR Calculation?
- Existing lease agreement: Actual signed lease — most straightforward documentation
- Market rent appraisal (Form 1007): Appraiser determines market rent for vacant or new purchase
- Short-term rental income: Airbnb / VRBO — typically 12-month average from platform or market study
- Multi-unit properties: All units combined; vacant units use market rent from appraisal
- Mixed-use properties: Residential portion only; commercial income excluded on most programs
What's Included in PITIA?
- P — Principal: Monthly principal reduction on the loan
- I — Interest: Monthly interest on the loan balance
- T — Taxes: Monthly property tax escrow (annual ÷ 12)
- I — Insurance: Monthly homeowner's insurance escrow
- A — HOA / Association: Monthly HOA dues if applicable (condos, planned communities)
Eligible Investment Property Types
CFC finances a wide range of investment property types under both full-doc and DSCR programs. Property type affects LTV limits, reserve requirements, and program eligibility.
Single-Family Residence (SFR)
The most common investment property type. Eligible for both full-doc and DSCR programs. Widest range of loan options, best rates, and highest LTV limits. 1-unit detached homes.
2–4 Unit Properties (Small Multi-Family)
Duplexes, triplexes, and fourplexes. All units' rental income counted in DSCR calculation. Excellent cash flow potential. Down payment typically 20–25%. Eligible for both programs.
Condominiums
Warrantable and non-warrantable condos eligible. Warrantable condos (Fannie/Freddie approved) qualify for full-doc. Non-warrantable condos often require DSCR or Non-QM programs. HOA dues included in PITIA.
Short-Term Rentals (Airbnb / VRBO)
Vacation rentals and short-term rental properties eligible under DSCR programs. Income documented via 12-month platform history or market rent study. Higher income potential but more documentation complexity.
5+ Unit Multifamily
Properties with 5 or more units are classified as commercial real estate and require commercial financing. CFC can refer to commercial lending partners for these properties.
Townhomes & Planned Unit Developments
Attached townhomes and PUDs eligible for both full-doc and DSCR programs. HOA dues included in PITIA calculation. Treated similarly to single-family for underwriting purposes.
Buying vs. Refinancing an Investment Property
CFC handles both the purchase of new investment properties and the refinance of existing ones — including cash-out refinances to pull equity and fund your next acquisition.
Investment Property Purchase
Acquiring a new rental or investment property
Full-Doc Purchase Requirements
- 15–25% down payment (1-unit: 15%, 2–4 unit: 25%)
- W-2s, tax returns, and pay stubs required
- 75% of subject property rent counted as income
- All existing rental income documented via Schedule E
- Up to 10 financed properties (Fannie Mae)
- 6 months PITIA reserves required
- Minimum 620 credit score
DSCR Purchase Requirements
- 20–25% down payment (program dependent)
- No personal income documentation required
- DSCR ≥ 0.75 (1.0+ preferred; 1.25 ideal)
- Market rent appraisal (Form 1007) for vacant properties
- LLC / entity borrowers allowed
- 3–12 months PITIA reserves required
- Minimum 620 credit score
Investment Property Refinance
Rate-term and cash-out refinance options
Rate & Term Refinance
- Lower your interest rate and monthly payment
- Change loan term (e.g., 30-year to 15-year)
- Full-doc: up to 75–80% LTV
- DSCR: up to 75–80% LTV
- No cash out — closing costs can be rolled in
- Seasoning requirements may apply (6–12 months)
Cash-Out Refinance
- Pull equity from existing investment properties
- Use proceeds to fund next acquisition — no restrictions
- Full-doc: up to 75% LTV cash-out
- DSCR: up to 75% LTV cash-out
- Minimum 12 months ownership (most programs)
- Delayed financing exception for recent cash purchases
- No limit on number of cash-out refis (DSCR)
Delayed Financing Exception — Cash Buyers
If you purchased an investment property with cash and want to pull your equity back out immediately — without waiting the standard 6–12 month seasoning period — the Delayed Financing Exception allows a cash-out refinance shortly after closing. The loan amount is limited to the original purchase price plus documented closing costs. Available on both full-doc and DSCR programs. This is a powerful strategy for investors who buy at auction or need to move quickly, then recapitalize immediately after closing.
Full Qualification Requirements
| Requirement | Full-Doc Investor | DSCR Loan |
|---|---|---|
| Income documentation | W-2s, tax returns (2 yr), pay stubs | None — property income only |
| Employment verification | Required (VOE) | Not required |
| Minimum credit score | 620 (higher = better rate) | 620 (higher = better rate) |
| Down payment — 1 unit | 15% minimum | 20–25% minimum |
| Down payment — 2–4 unit | 25% minimum | 20–25% minimum |
| Max LTV (purchase) | 85% (1-unit) | 75–80% |
| Max LTV (rate/term refi) | 75–80% | 75–80% |
| Max LTV (cash-out refi) | 75% | 70–75% |
| DSCR minimum | N/A | 0.75 (select programs) |
| DTI maximum | 45–50% | N/A (DSCR based) |
| Post-closing reserves | 6 months PITIA | 3–12 months PITIA |
| LLC / entity borrower | No | Yes |
| Max financed properties | 10 (Fannie Mae) | Unlimited |
| Prepayment penalty | None | Possible (1–3 yr) |
| Interest-only option | Limited | Yes — 5 or 10 yr IO |
| Short-term rentals | Limited | Yes (Airbnb / VRBO) |
| Loan amounts | Up to conforming + jumbo | Up to $3M+ |
| Typical rate premium | Baseline | +0.75–1.5% vs. primary |
Benefits, Disadvantages & Watch-Outs
Benefits
- Build long-term wealth through real estate equity appreciation
- Generate passive rental income that covers the mortgage and produces cash flow
- DSCR loans require zero personal income documentation — qualify on the property alone
- LLCs and entities can be borrowers on DSCR — protect personal assets
- No limit on number of financed properties under DSCR programs
- Cash-out refinance lets you recycle equity into new acquisitions without selling
- Short-term rentals (Airbnb / VRBO) eligible — often higher income than long-term
- Interest-only options maximize monthly cash flow during hold period
- Delayed financing exception allows immediate recapitalization after cash purchase
- Tax advantages: depreciation, mortgage interest deduction, expense deductions
- Inflation hedge — rents and property values tend to rise with inflation
- Portfolio diversification beyond stocks and bonds
Disadvantages
- Higher down payment required — 15–25% vs. 3–5% for primary residence
- Higher interest rates — investment properties carry a rate premium of 0.5–1.5% over primary residence rates
- DSCR loans carry an additional premium of 0.75–1.5% over full-doc investor loans
- Larger reserve requirements — 3–12 months PITIA in liquid assets after closing
- Landlord responsibilities: maintenance, repairs, tenant management, vacancies
- Rental income is not guaranteed — vacancies reduce cash flow
- Property management costs (8–12% of rent) reduce net cash flow
- DSCR prepayment penalties can be costly if you sell or refinance early
- Non-warrantable condos and some property types have limited financing options
- Market risk — property values and rents can decline
Watch Out For
- Prepayment penalties on DSCR loans — typically 3-2-1 or 5-4-3-2-1 step-down structure. Know your penalty before closing and factor it into your exit strategy.
- Vacancy risk on DSCR — if the property sits vacant, you're covering the full PITIA out of pocket. Maintain 6+ months reserves beyond the lender's requirement.
- Short-term rental income volatility — Airbnb / VRBO income can fluctuate significantly by season. Underwrite conservatively using annual averages, not peak months.
- LLC titling — if you want the loan in an LLC, confirm this before applying. Not all DSCR lenders allow entity borrowers, and switching title after closing is complex.
- Rate adjustments on ARM products — DSCR ARMs can adjust significantly after the initial fixed period. Know your caps and worst-case payment.
- Appraisal risk — if the market rent appraisal comes in lower than expected, your DSCR drops and you may need a larger down payment to qualify.
Real Investor Scenarios — Which Loan Fits?
First-Time Investor — W-2 Employee
Situation
Salaried professional buying their first rental property. Strong income, clean tax returns, 720 credit score. Wants the lowest possible rate.
Recommended: Full-Doc Conventional Investor Loan
15% down on a single-family rental. W-2 income qualifies easily. 75% of market rent counted toward qualifying income. Best rate available for investment properties.
Self-Employed Investor — Multiple Properties
Situation
Business owner with 8 existing rentals. Tax returns show minimal income after deductions. Wants to add a 9th property without personal income documentation.
Recommended: DSCR Loan
No personal income required. Qualifies on the new property's rent-to-PITIA ratio alone. LLC can be the borrower. No limit on financed properties under DSCR.
Airbnb / Short-Term Rental Investor
Situation
Investor targeting a vacation market property in FL or TN. Property will be listed on Airbnb with projected annual income significantly above long-term market rent.
Recommended: DSCR Loan (STR-eligible program)
DSCR calculated using 12-month Airbnb income history or market rent study. No personal income required. STR-eligible programs available for FL and TN vacation markets.
Portfolio Investor — Cash-Out to Acquire
Situation
Investor with $400K equity in existing rentals. Wants to pull cash out to fund the down payment on two new acquisitions without selling.
Recommended: DSCR Cash-Out Refinance
Cash-out up to 75% LTV on existing properties. No personal income required. Proceeds can be used for any purpose including down payments on new properties. No limit on number of cash-out refis.
Cash Buyer — Delayed Financing
Situation
Investor who purchased a distressed property at auction for $180K cash. Wants to pull their capital back out immediately to stay liquid for the next deal.
Recommended: Delayed Financing Exception (DSCR or Full-Doc)
Cash-out refinance immediately after closing — no 6-month seasoning required. Loan amount limited to original purchase price + closing costs. Recapitalizes the investor quickly.
Duplex Investor — House Hacking
Situation
Buyer purchasing a duplex — living in one unit, renting the other. Wants to use rental income from the second unit to offset their mortgage payment.
Recommended: Full-Doc — Primary Residence Duplex
Owner-occupied 2-unit properties qualify for primary residence rates (lower than investment). 75% of rental income from the second unit counted toward qualifying. As low as 5% down with conventional financing.
Building a Rental Portfolio with DSCR Financing
DSCR loans are uniquely suited for portfolio growth because they scale with the properties — not with your personal income. Here's how experienced investors use DSCR to build efficiently.
The BRRRR Strategy with DSCR
Buy, Rehab, Rent, Refinance, Repeat — DSCR cash-out refinances are the engine of the BRRRR strategy. After stabilizing a property (rehabbed and rented), a DSCR cash-out refi pulls your equity back out to fund the next acquisition. No personal income required at any step. The property's improved value and rent support the new loan.
LLC Portfolio Structure
DSCR loans allow LLCs and entities as borrowers — a critical advantage for investors who hold properties in separate LLCs for liability protection. Each property can be in its own LLC with its own DSCR loan. Personal assets are shielded from property-level liability. Consult your attorney and CPA on the right entity structure for your situation.
Conventional → DSCR Transition
Fannie Mae limits borrowers to 10 financed properties. Once you hit that ceiling, DSCR loans become the primary growth vehicle — no personal income documentation, no limit on financed properties. Many investors use conventional financing for their first 10 properties (lowest rates), then transition to DSCR for properties 11+.
Interest-Only for Cash Flow Optimization
DSCR interest-only loans reduce monthly payments during the IO period (typically 5 or 10 years), maximizing cash flow. The lower payment also improves the DSCR ratio, potentially qualifying properties that wouldn't qualify on a fully amortizing payment. Useful for value-add properties where rents will increase over time.
Investment Property & DSCR FAQ
What is the minimum DSCR ratio to qualify?
Most DSCR programs require a minimum ratio of 1.0 (rent equals the full PITIA payment). However, select programs allow DSCR as low as 0.75 — meaning the rent covers 75% of the payment — with a larger down payment (typically 25–30%) and higher credit score. A DSCR of 1.25 or higher qualifies for the best rates and maximum LTV. The higher the DSCR, the stronger the loan profile.
Can I use a DSCR loan to buy a short-term rental (Airbnb / VRBO)?
Yes — DSCR programs are available for short-term rental properties in eligible markets including Florida and Tennessee vacation areas. Income is documented using 12 months of platform history (Airbnb, VRBO, etc.) or a market rent study from the appraiser. Note that STR income can be more volatile than long-term rental income, so lenders may use a conservative annual average rather than peak-season projections.
Can an LLC be the borrower on a DSCR loan?
Yes — this is one of the most significant advantages of DSCR loans over conventional investment financing. LLCs, LPs, corporations, and other entities can be the borrower. The individual members/owners typically sign a personal guarantee, but the loan and title are in the entity's name. This is critical for investors who hold properties in separate LLCs for liability protection. Confirm entity eligibility with CFC before structuring your purchase.
How many investment properties can I finance with DSCR loans?
There is no limit on the number of properties you can finance with DSCR loans — each property is underwritten independently based on its own cash flow. This is a major advantage over conventional financing, which caps borrowers at 10 financed properties under Fannie Mae guidelines. Many portfolio investors use conventional loans for their first 10 properties (lowest rates), then transition to DSCR for continued growth.
What is the difference between a DSCR loan and a conventional investment property loan?
The core difference is income documentation. Conventional investment loans require full personal income documentation (W-2s, tax returns, pay stubs) and count your personal DTI. DSCR loans require no personal income documentation — the property's rent-to-PITIA ratio is the only income metric. DSCR loans also allow LLC borrowers, have no limit on financed properties, and allow short-term rental income. The trade-off is a higher interest rate (typically 0.75–1.5% above conventional) and larger down payment.
What are typical DSCR loan prepayment penalties?
Most DSCR loans include a prepayment penalty — typically a step-down structure such as 3-2-1 (3% in year 1, 2% in year 2, 1% in year 3) or 5-4-3-2-1 over five years. This means if you sell or refinance during the penalty period, you pay a percentage of the outstanding loan balance. Always review the prepayment penalty terms before closing and factor them into your exit strategy. Some programs offer no-prepayment-penalty options at a slightly higher rate.
How is rental income calculated for a full-doc investment loan?
For full-doc conventional investment loans, rental income is calculated as follows: (1) For the subject property being purchased: 75% of market rent (from Form 1007 appraisal) is counted as qualifying income. (2) For existing rental properties you own: Schedule E from your tax returns is used — typically the net rental income after expenses, averaged over 2 years. If Schedule E shows a loss, it's counted as a liability. Positive rental income offsets your DTI; negative rental income adds to it.
Can I do a cash-out refinance on an investment property to buy another one?
Yes — and this is one of the most powerful strategies in real estate investing. A DSCR cash-out refinance allows you to pull up to 75% LTV from an existing investment property with no personal income documentation. The proceeds can be used for any purpose, including the down payment on a new acquisition. There is no limit on the number of DSCR cash-out refinances you can do. This is the engine of the BRRRR strategy and allows investors to recycle equity without selling.
Ready to Grow Your Rental Portfolio?
Whether you're buying your first investment property or your fifteenth, CFC has the financing to make it happen — full-doc investor loans for W-2 borrowers and DSCR loans for investors who want to qualify on the property's cash flow alone.
Call us to discuss your investment strategy. We'll identify the right program, run the DSCR numbers on your target property, and tell you exactly what you need to close. No obligation.
Equal Housing Lender. © 2004–2026 Coastal Funding Corporation Inc. NMLS: 103035. Licensed in FL, SC & TN. This is not a commitment to lend. Investment property loan programs are subject to change. Restrictions apply. All rights reserved.