Debt-Service Coverage Ratio Loans

Put your investment property to work.

Qualify with rental income

Up to 80% loan-to-value

Fixed or adjustable rates

What is a DSCR loan?

A DSCR loan is a mortgage designed for real estate investors. It compares the qualifying rental income generated by a property with the debt obligation associated with financing it.

This allows eligible investors to qualify based on the property’s cash flow without relying on traditional personal-income documentation. It may be especially useful for self-employed investors and entrepreneurs whose tax returns or other financial documents do not fully reflect their available cash flow.

Michigan First DSCR loan features

Michigan First’s DSCR loan program offers financing designed around the needs of experienced property investors. Program features include:

Minimum loan amount of $100,000
Financing up to 85% loan-to-value
Minimum credit score of 660
Minimum DSCR of 0.75
Fixed-rate and adjustable-rate options
Qualification using rental income from the subject property
Financing for eligible investment properties
Availability for qualifying multifamily homes, condominiums and planned unit developments

Loan approval, rates, terms and required documentation depend on the borrower, property and complete application.

How is the debt-service coverage ratio calculated?

The debt-service coverage ratio measures how the property’s qualifying rental income compares with its housing-related debt obligation. In general, it is expressed as:

Qualifying monthly rental income ÷ monthly property debt obligation = DSCR

For example, if a property produces $2,000 in qualifying monthly rental income and has a qualifying monthly debt obligation of $1,600, its DSCR would be 1.25.

The income and expenses included in the calculation are determined according to program guidelines. A Michigan First Mortgage Loan Officer can calculate the property’s ratio and explain whether it meets the program requirements.

Who may benefit from a DSCR loan?

A DSCR loan may be worth considering if you are an experienced real estate investor who wants to expand or refinance an investment portfolio without qualifying primarily through personal income.

This type of financing may be useful for:

Real estate investors with at least 12 months of experience
Self-employed investors or entrepreneurs
Investors purchasing an income-producing property
Investors financing an eligible multifamily home, condominium or planned unit development
Property owners refinancing an eligible investment property

DSCR loans are intended for investment properties rather than homes used as a borrower’s primary residence.

Eligible investment properties

Michigan First DSCR financing may be available for eligible:

Investment homes
Multifamily properties
Condominiums
Planned unit developments

Property eligibility may depend on its condition, intended use, rental income and other program requirements. Before making an offer, speak with a Mortgage Loan Officer about the property you are considering.

Fixed-Rate and Adjustable-Rate DSCR loans

Michigan First offers both fixed-rate and adjustable-rate DSCR loan options.

A fixed-rate DSCR loan maintains the same interest rate throughout the loan term, providing greater predictability for long-term investment planning.

An adjustable-rate DSCR loan generally begins with a fixed rate for an established period. After that period, the rate may change according to the terms of the loan.

Your investment timeline, expected property cash flow, and tolerance for future payment changes can help determine which option may be appropriate.

Explore financing for your next investment

The right financing can help you purchase your next income-producing property or strengthen an existing real estate portfolio. A Michigan First Mortgage Loan Officer can review the property’s projected rental income, calculate its DSCR and help you determine whether this program supports your investment goals.