What Is a 30-Year DSCR-Based Rental Loan

Real estate investors seeking long-term financing for rental properties often run into obstacles when applying for conventional mortgages, especially if they’re self-employed, have multiple properties, or lack strong W-2 income. That’s where 30-year DSCR-based rental loans offer a powerful alternative.

These loans are designed specifically for investors; providing flexible, income-based approval that focuses on property performance, not personal financial documentation.

What Is a DSCR-Based Rental Loan?

A DSCR loan is a real estate investment loan that relies on a property’s Debt Service Coverage Ratio (DSCR) to determine eligibility. Unlike traditional loans, which require tax returns and income verification, DSCR loans use rental income from the property to assess whether the borrower can repay the loan.

How to Calculate DSCR?

DSCR Formula:

DSCR = Monthly Rental Income / Monthly Loan Payment (PITI)

A DSCR of 1.00 means the rental income covers the mortgage payment exactly. Most lenders look for a DSCR of 1.00 or higher, with better loan terms often reserved for borrowers with a ratio of 1.20 or more.

Check out our blog on How to Calculate DSCR for more information and example scenarios.

Why a 30-Year Term?

Most hard money and private loans are short-term—usually 6 to 24 months. A 30-year DSCR-based loan offers the long-term stability of a traditional mortgage with the flexibility of investor-focused underwriting.

Benefits of a 30-Year DSCR Loan:

Fixed interest rates for predictable cash flow
No income or employment verification
No limit on the number of financed properties
Prepayment flexibility (some lenders offer low or no prepay penalties)
Streamlined approval process based on rental performance

This type of loan is ideal for buy-and-hold investors who want to build long-term rental portfolios without jumping through hoops for a traditional mortgage loan.

Example of a 30-Year DSCR loan

Let’s say you’re purchasing a single-family rental property in Houston for $250,000. You plan to rent it out for $2,000/month and take out a DSCR loan with a 30-year fixed term.

Estimated mortgage payment (PITI): $1,400/month
Monthly rental income: $2,000/month
DSCR = 2,000 ÷ 1,400 = 1.43

With a DSCR of 1.43, you easily meet a lender’s threshold (typically 1.00–1.25) and would likely qualify for favorable terms. You typically don’t need to submit tax returns or proof of personal income; you just need documentation showing the expected or actual rental income.

Who Should Use a 30-Year DSCR Loan?

This type of loan is best for:

Real estate investors with strong rental income
Borrowers who are self-employed or lack traditional income documentation
Investors looking to refinance short-term loans into long-term financing
Buyers planning to hold properties for the long term

A 30-year DSCR-based rental loan gives investors the chance to lock in long-term financing based on rental property performance, not personal income. It’s a smart solution for scaling a portfolio without being limited by conventional underwriting standards.

At LJC Financial, we offer 30-year terms with 30-year amortization DSCR loans in the Houston, Texas area tailored to your investment goals. Whether you’re purchasing your first rental or interested in adding more to your investment portfolio our team can help you secure financing that works for your strategy.