Straight answers Questions people here actually ask
The questions the ads in this category raise and then never answer, answered in the order they get asked.
What is a DSCR loan?
It is a rental property loan underwritten on the property instead of on you. The lender divides the property's monthly rent by its full monthly payment. That payment includes principal, interest, property taxes, insurance and any HOA dues. If the rent covers the payment, the file has a ratio a lender can work with. Your pay stubs, your W-2s and your tax returns are not part of it.
Why can a DSCR lender skip my tax returns when a bank cannot?
Because it is a different kind of credit. A DSCR loan is made for a business purpose, and 12 CFR 1026.3(a)(1) exempts business-purpose credit from Regulation Z (eCFR, read 2026-09-04). Regulation Z is the rule that drives the consumer income documentation you are used to. The exemption is the actual reason the file can be the property's. It is not a loophole and it is not a favor.
What happens if the rent does not cover the payment?
You have more than one door and none of them is a dead end. Programs exist that accept a ratio below break-even with a larger down payment. Separate programs qualify the property with no ratio at all. A self-employed investor can also be read on bank deposits instead of on the rent. Which of those your file supports depends on the property. So we run them side by side rather than pick one for you.
Can I buy the rental in an LLC?
Yes, and most investors do. The loan is underwritten on the property's income. An entity on title does not complicate qualification the way it does on a consumer loan. Ask your own attorney or CPA whether the entity is right for you. We handle the lending half. If the entity you chose narrows which lenders will take the file, you hear that before escrow.
Will a DSCR loan show up on my personal debt-to-income ratio later?
That depends on the next lender's guideline and on whether you signed a personal guaranty. It is a question to answer before you close, not after. One thing is certain. An entity-vested business-purpose loan with no personal income file reads differently from a consumer mortgage in your own name. We check the treatment on your specific structure while the file is still open.
How many rental properties can I finance before conventional stops working?
Ten. Fannie Mae's Selling Guide caps a borrower at 10 financed properties for a second home or an investment property. Source: Selling Guide B2-2-03, read 2026-09-04. That ceiling is written into the rulebook. It is not a judgment on your file, and it is the single most common reason a working investor moves to DSCR. Each DSCR property stands on its own rent instead of stacking against you.
Do I need a signed lease before I can qualify?
Not always. When a property is vacant or you are buying it, an appraiser can produce a market rent figure. Many programs will underwrite from that. A signed lease is stronger when the rent on it is higher than market. When the lease is below market, the appraisal can be the better document. We look at both before we send the file anywhere.
Can I use short-term rental income from an Airbnb or VRBO?
On some programs, yes. Short-term rental income is usually supported by a specific income analysis inside the appraisal rather than by a lease. Availability moves by lender and by property type, and it is not on every program. That question is cheap to answer before you write an offer. It is expensive to discover during escrow.
Can I take cash out of a rental I already own?
Yes, and there are two shapes of it worth pricing against each other. A cash-out replaces your existing first mortgage. A second position leaves your first loan exactly where it is. That matters when the rate on it is one you never want to give up. The right answer depends on what the money is for and on the blended cost across everything you owe.
I just bought it and it is already worth more. Do I have to wait to pull equity out?
Sometimes no. Some programs allow a cash-out using the current appraised value without a long ownership seasoning period, and others require you to wait. This is a real difference between lenders rather than a rule. The answer depends on which shelf your file goes to. We check the seasoning requirement first, because it decides the timing of everything else.
Is a DSCR loan the same as hard money?
No, and confusing the two costs investors a lot of money. Hard money is short-term, expensive financing built for a flip or a bridge. A DSCR loan is a long-term hold instrument for a rental you intend to keep. Investors who bought with hard money and then kept the property are often paying flip pricing on a hold. Refinancing out of that is one of the most common files we see.
What about a property I plan to renovate and then rent?
That is usually a different loan than a DSCR, and it is worth saying plainly rather than selling you the wrong one. A value-add purchase often runs on a construction or rehab structure first. The DSCR loan comes after, once the property is rented and the ratio is real. Two loans in sequence is normal here. Knowing that at the start changes what you offer on the property.
Can I get a DSCR loan on a property outside California?
Yes. Loan Factory, Inc. is licensed in 48 states. A California investor buying out of state does not need a second relationship. Source: Loan Factory published figures, read 2026-08-06. The arithmetic does not change across state lines, but two inputs to it do: the property tax rule and the insurance market. We price both on the address rather than on a national average.
Why will you not publish your rates, your minimum score or your maximum loan amount?
Because we would be publishing someone else's numbers. Terms on this product move by lender, by property and by week. A number on a page is stale before it helps you. The competing ads publish five different rates and five different score minimums. That tells you what any single one of them is worth. You get the numbers for your file, in writing, with the date they were pulled.
