Everything You Need to Know About Multifamily DSCR Loans in 2025

by Unbeatable Loans' John Pastre – May 30, 2025

Investing in multifamily or mixed-use real estate? DSCR (Debt Service Coverage Ratio) loans are a powerful financing option for buyers of 5–8 unit multifamily properties or 2–8 unit mixed-use buildings. Here’s exactly what you need to know to qualify under our preferred lender's guidelines and how to position your loan for approval.

What is a DSCR Loan?

DSCR loans are based on the income the property generates, not your personal income. Instead of W-2s or tax returns, lenders use the rental income vs. debt payment to determine if the property qualifies. This is ideal for investors looking to scale without the red tape of traditional lending.

Property Types Allowed

• 5–8 unit residential properties (multifamily)

• 2–8 unit mixed-use buildings (retail or office components allowed)

• Must be non-owner occupied and held for business/investment purposes

Commercial space must not exceed 49% of total property income.

Borrower Requirements

✅ U.S. Citizens, Permanent Residents, and certain Visa holders are eligible
✅ Entities like LLCs, LPs, and Corporations are allowed with personal guarantees
✅ First-time investors are allowed, but restrictions apply
❌ First-time homebuyers are not eligible
❌ No power of attorney allowed for foreign nationals

Credit Requirements

• Minimum FICO: 660

• Credit history: At least 3 active credit tradelines for 12+ months

• Housing history: No more than 1×30 late in the last 12 months

For foreign nationals, U.S. credit is not required—but alternative credit documentation is.

DSCR Requirements

• DSCR = Gross Rent ÷ PITIA (or ITIA if interest-only)

• Minimum DSCR: 1.0

• Rent is based on lease OR market rent from appraisal—whichever is lower

• No rounding: A DSCR of 0.996 does not qualify

If no lease exists, market rent can be used with 75% credit toward income.

Transaction Types Allowed

• Purchase

  • Up to 80% LTV on most scenarios

  • 1031 exchanges allowed

• Rate/Term Refinance

  • No waiting period for inherited or divorce-awarded properties

• Cash-Out Refinance

  • Max $500,000 cash back

  • Property must be held ≥ 6 months or meet delayed financing rules

Vacant units are allowed (with reduced income credit or LTV).

Reserve & Asset Requirements

• 6–12 months PITIA reserves based on loan size

• Gift funds allowed (borrower must contribute at least 10% of down payment)

• Business assets permitted for self-employed borrowers

• No crypto or unsecured loans allowed as funds

Insurance & Appraisal Notes

• Commercial general liability policy required for mixed-use properties

• Full interior appraisals required

• Appraisals must be within 90 days

• Rent rolls and operating statements required

• Property flipping limits apply if resold within 90–180 days

Key Restrictions

• No rural properties

• No owner-occupied units (including relatives)

• No ITIN-only borrowers unless treated as foreign nationals

• No lease-to-own, construction-to-perm, or assumption loans

Why Investors Love DSCR Loans

• No personal income docs required

• Fast closings and streamlined process

• Scalable for real estate portfolios

• Great for long-term rentals, midterm rentals, and Airbnb conversions

Need Help Structuring Your Deal?
Our team at Unbeatable Loans specializes in investment property loans—including multifamily and mixed-use purchases using DSCR programs.

📅 Book a consultation: Schedule a call
📥 Get prequalified or submit your loan scenario to jpastre.com/contact