DSCR Loan Requirements

DSCR Loan Requirements for Commercial Property Investors

You can get commercial property financing with debt service coverage ratio loans or DSCR loan requirements. These loans put the property's potential for cash flow ahead of the borrower's income. Use the loan service coverage ratio (DSCR) to figure this out. It looks at how much the property makes in rent and how much it owes on its loans.

DSCR loans have a lot of benefits for business people. For starters, they keep work finances separate from personal ones. Traditional loans depend on how much money the client makes. Still, DSCR loans are based on how much money the property can make. Second, you don't need the usual proof of income to get a DSCR loan. This makes them perfect for owners whose tax situations are complicated or who are just starting and have a limited personal income history.

You can trust Commercial Lending USA if you need to know DSCR loan requirements in the commercial property market. They know a lot about this type of lending and can help business owners find opportunities and get the money they need to reach their real estate goals.

Learning About the DSCR Loan Requirements 

What is the Debt Service Coverage Ratio (DSCR)?

Lenders use the Debt Service Coverage Ratio (DSCR) as a primary way to determine if a commercial property loan will work. In this case, it looks at how much money a property can make to cover its debts, like the monthly mortgage payment.

Calculating DSCR

The DSCR is calculated using a simple formula:

DSCR = Annual Net Operating Income (NOI) / Annual Debt Service

  • Annual Net Operating Income (NOI): The property's yearly income after subtracting all reasonable operating costs (not including debt payment).

  • Annual Debt Service: This is how much the loan payment (principal and interest) needs to be each year.

If the DSCR is high, the property is financially stable because it makes more money than it needs to pay its debts.

Minimum DSCR Loan Requirements

Commercial property loans usually have a DSCR of around 1.25. Still, the minimum requirement can be different based on several factors, such as:

Loan Type

  • SBA Loans: The DSCR standards for these government-backed loans may be slightly lower, starting at 1.10.

Property Type

  • Higher-risk properties: Lenders may need a higher DSCR (e.g., 1.40 or more) for properties in less established markets or with a higher chance of vacancies.

  • Lower-risk properties: Properties in significant areas or with stable tenants may get by with a slightly lower DSCR (1.20).


  • There are different risk tolerances and underwriting rules for each loan. If the borrower has a lot of experience and a good loan package, some lenders may be more flexible with their DSCR standards.

Beyond DSCR: Additional Commercial DSCR Loan Requirements 

Even though DSCR is essential, getting a commercial DSCR loan comes with extra requirements made by lenders to keep risk in check. Here is a list of some basic requirements:

Loan-to-Value (LTV) Ratio

The LTV ratio checks how much the loan is compared to how much the property is worth. Lenders usually need a lower LTV (around 75–80%) for DSCR loans than regular ones. A significant down payment will lower the lender's danger.

Credit Score

It is better to have a credit score of at least 680 to get a DSCR loan than for most other loans. A good credit score shows you know how to handle debt and are careful with your money.

Down Payment

DSCR loans usually need a more significant down payment (20-30%) than regular loans because they focus on how the property will make money. This lowers the risk for the lender because they don't have to give as much money.

Property Type

You can only get a DSCR loan for some commercial property. Lenders usually want to lend money on homes that can consistently bring in money and have low vacancy rates. Office buildings, stores, warehouses, and multifamily flats are all eligible property types.


The amount of knowledge an investor has about commercial properties can significantly affect the approval of a DSCR loan. Suppose a borrower has a history of managing properties well and making money. In that case, lenders may be more flexible with their DSCR or LTV standards. On the other hand, new investors may have to meet stricter standards or find a co-signer with more experience.

Why Choose Commercial Lending USA for Your DSCR Loan?

To get through the complicated world of DSCR loans, you need an investor with a lot of knowledge and experience. There are a few main reasons why Commercial Lending USA stands out:

In-House Underwriting Expertise

Our team knows much about DSCR loans and can quickly get through the approval process. This can make your application easier and speed up the loan acceptance process.

Correspondent Lender and Superbroker Advantage

Commercial Lending USA doesn't just give loans from one lender. They can connect you with a vast network of lenders and loan programs because they are both an associate lender and a superbroker. This lets them find the best rates and terms for your needs, which increases your chances of getting the best DSCR loan possible.

Beyond DSCR Loans

We know a lot more than just DSCR loans. A traditional loan with a minor DSCR requirement or a different loan structure would be better for you. That being the case, we can also look into those choices. We want to help you get the money you need to reach your goals in the best way possible.


To get a commercial DSCR loan, you must know how much the property could make. A DSCR that satisfies or exceeds the lender's requirements typically around 1.25 can demonstrate this. In addition to DSCR, lenders also look at loan-to-value ratio (LTV), which is generally lower for DSCR loans at 75-80%, credit score, which is usually higher at 680 or above, and down payment, which is typically between 20 and 30%.

Regarding DSCR loan requirements, Commercial Lending USA stands out as the best partner. Their in-house screening makes the process go more quickly, and as a correspondent lender and super broker, they can get you the best rates and terms from a vast network of lenders. They may even look into standard loans if that would be better for you.

Refrain from handling DSCR loans by yourself. Get a free consultation from Commercial Lending USA or call us (571) 544-6600 today and determine which DSCR loan option will help you reach your commercial property goals.


What is a DSCR loan?

A DSCR (Debt Service Coverage Ratio) loan is a financing option for commercial properties that prioritizes the property's cash flow potential over the borrower's income.

What are the benefits of DSCR loans?

DSCR loans have these pros:

  • You can only qualify if you show proof of your regular income.

  • Do not mix commercial loans with personal money.

What is a decent DSCR for a business loan?

The average rate on commercial loans is about 1.25, but it can differ for each loan type, property type, and lender.

Besides DSCR, what else do lenders consider?

Lenders also consider factors like loan-to-value ratio (LTV), credit score, down payment, and property type.

Why choose Commercial Lending USA for my DSCR loan?

You went with Commercial Lending USA for my DSCR loan because-

  • DSCR loans that are underwritten in-house

  • As a correspondent lender and super broker, you can get loans from more lenders and choose from more loan choices.

  • Know-how in both standard loans and DSCR loans

How can I get started with a DSCR loan?

Contact Commercial Lending USA for a free consultation and pre-qualify for the best DSCR loan option for you.

Sam Haq, CEO

Commercial Lending USA


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