DSCR Insider — Content Bank Week 2

A DSCR loan (Debt Service Coverage Ratio loan) is a type of investment property mortgage that qualifies you based on the property's rental income — not your personal income.

Here's the simple version:

The lender divides your monthly rent by your monthly payment (principal + interest + taxes + insurance). If the result is 1.0 or higher, the property "pays for itself" and you qualify.

Example:
Monthly rent: $2,200
Monthly payment (PITIA): $1,900
DSCR: 2200 ÷ 1900 = 1.16 ✅

You need no W-2s, no tax returns, no employment history. The property does the qualifying.

Why investors use it:
1. Self-employed investors often show low income on taxes due to write-offs and depreciation — DSCR ignores that entirely.
2. Investors who already own multiple properties hit Fannie Mae's 10-loan limit with conventional financing — DSCR has no such cap.
3. LLC owners can close the loan in their business name with many lenders.
4. Investors in affordable markets (think Kansas City, Detroit, midwest cities) often find strong DSCR ratios because rent-to-price ratios are favorable.

Key requirements:
— 620+ credit score minimum (680+ for best rates)
— 20–25% down payment on purchases
— 3–6 months of mortgage payments in reserves
— A signed lease or market rent appraisal

It's a 30-year fixed product at most lenders — not a short-term balloon loan. Rates are typically slightly higher than conventional (0.5–1.5% premium), but the trade-off is qualifying without income documentation.

DSCR loans currently represent roughly 28–29% of all non-QM originations nationally. It's the most widely used investor mortgage product outside of conventional financing.

Jermaine Fields | NMLS #2067609 | NEXA Lending | CA & MO Licensed
*Not a commitment to lend. Not licensed in Kansas.*

Self-employed investors have more mortgage options than most people realize. The challenge is that traditional lenders use your net income after deductions — and business owners often write off a lot, making their taxable income look low.

Here are four loan types built for exactly this situation:

1. DSCR Loan (Best for Investment Properties)
No income verification at all. Qualifies purely on the rental property's income. If the property cash flows, you qualify. This is the cleanest option for investors with rental properties.

2. Bank Statement Loan
Uses 12–24 months of bank statements instead of tax returns. Lenders look at actual deposits — not your Schedule C. This is ideal for business owners with strong revenue but significant write-offs reducing their taxable income.

3. 1099 Loan
For independent contractors and freelancers. Uses 1099s from the last 1–2 years to calculate income, bypassing the tax return entirely.

4. P&L Loan (Profit & Loss Statement)
Some lenders accept a 12-month P&L prepared by a CPA. No tax returns needed — just a statement of your business's income.

The key insight: the mortgage industry has largely solved the self-employed qualifying problem. These Non-QM products exist specifically because millions of Americans earn strong incomes but can't show it on a 1040.

For someone buying investment property specifically, the DSCR loan is usually the first call because the property itself qualifies — your income is completely irrelevant to the underwriter.

Jermaine Fields | NMLS #2067609 | NEXA Lending | CA & MO Licensed
*Not a commitment to lend. Not licensed in Kansas.*

BRRRR stands for: Buy, Rehab, Rent, Refinance, Repeat.

The idea is to recycle your initial capital so you can keep buying properties without needing a full down payment for each new deal.

Here's how it works step by step:

BUY — Acquire a distressed property below market value. In affordable markets like Kansas City or Detroit, this might be a $30–60K property with strong rental potential.

REHAB — Renovate to increase the property's value. A $25–35K rehab on the right property can push the ARV (after-repair value) to $90–120K.

RENT — Lease the property. This stabilizes it for the refinance and starts your cash flow.

REFINANCE — Refinance based on the new, higher appraised value. If the ARV is $100K and you refi at 75% LTV, your new loan is $75K. If your total cost was $70K (purchase + rehab), you've now pulled out $5K more than you put in — you've recycled 100%+ of your cash.

REPEAT — Use the cash-out proceeds to fund your next deal.

How to finance it:

Phase 1 (Buy + Rehab): You need a short-term loan that funds distressed properties. Options:
— Hard money loan (asset-based, 6–18 months, closes fast)
— Fix & flip loan (similar to hard money, designed for rehabs)
— Bridge loan (if you're bridging from one property to another)

Phase 2 (Refinance): Once the property is stabilized and rented, you refinance into a long-term product:
— DSCR loan: qualifies on rent income, not your personal taxes. 30-year fixed. No income docs needed.
— This is the most common refi vehicle for BRRRR investors.

The DSCR refi is what makes BRRRR scalable for self-employed investors or anyone with complicated income. You don't need to show the lender your tax returns — the rent roll qualifies you.

A recent BiggerPockets podcast episode featured an investor who built 7 rentals in 2 years using this exact approach in affordable midwest markets. The math works because the rent-to-price ratio in those markets is dramatically better than coastal cities.

Jermaine Fields | NMLS #2067609 | NEXA Lending | CA & MO Licensed
*Not a commitment to lend. Not licensed in Kansas.*

DSCR loans are probably the most underused tool in a rental investor's toolkit — here's the math

I'm a mortgage loan originator who works exclusively with investors. One thing I see constantly: newer investors don't know DSCR loans exist, and when they find out, it changes their entire strategy.

Here's the short version:

A DSCR loan qualifies you on the property's income, not yours. The formula is simple:
DSCR = Monthly Rent ÷ Monthly Payment (PITIA)

If that number is ≥ 1.0, you qualify at most lenders. No W-2s, no tax returns, no employment verification.

Real deal math:
- Property: 3BR/2BA SFR in Kansas City
- Purchase: $185,000 | Down: $46,250 (25%) | Loan: $138,750
- Rate: ~7.375% (30-yr fixed)
- PITIA: ~$1,190/mo
- Market rent: $1,650/mo
- DSCR: 1.39 ✅

That investor qualified on the KC property income alone. Didn't matter that he was self-employed with two years of write-offs on his taxes.

Who this actually helps:
1. Self-employed investors who show low net income on taxes
2. Investors who've hit the 10-loan conventional limit
3. Anyone buying in their LLC
4. Investors scaling fast who don't want income to be the bottleneck

Most lenders I work with require 620+ credit and 20–25% down. Some go to 15% on SFR.

Happy to answer questions.

*NMLS #2067609 | Licensed in CA & MO | Not licensed in Kansas | Not a commitment to lend*

For anyone trying to do BRRRR in an affordable market — here's how the financing actually works (DSCR refi explained)

I work with investors using the BRRRR method in markets like Kansas City and Detroit. The financing question I get most: "how do I refi out of the hard money loan once I'm done with the rehab?"

The answer for most investors is a DSCR loan. Here's the full picture:

PHASE 1 — THE ACQUISITION/REHAB LOAN
Hard money or fix & flip loan. Typical terms:
- 12-month term, interest-only
- 8.5–11% rate
- Closes in 7–14 days (this matters for distressed properties)
- Lends on ARV, not current value — so it funds both purchase AND rehab draws

Example:
- Purchase: $45,000
- Rehab budget: $32,000
- ARV: $105,000
- Hard money loan at 70% ARV: $73,500 → covers everything

PHASE 2 — THE DSCR REFI (the exit)
Once it's renovated and leased, you refi into a 30-year fixed DSCR loan.

At 75% of ARV ($105K):
- New DSCR loan: $78,750
- Total cost in: $77,000 (purchase + rehab - minor cash in)
- Cash out: $1,750+
- PITIA on $78,750 at 7.5%: ~$665/mo
- Rent: $1,100/mo
- DSCR: 1.65 ✅ | Cash flow: ~$435/mo

If you run this right, you can pull back near 100% of your initial capital and still own a cash-flowing rental.

The DSCR refi doesn't care about your income. It qualifies on the rent. Self-employed, W-2, business owner — doesn't matter.

This is exactly the model running in affordable midwest markets right now where price-to-rent ratios are 1.5–2x better than coastal cities.

Questions? Happy to run numbers on your specific deal.

*NMLS #2067609 | Licensed in CA & MO | Not licensed in Kansas | Not a commitment to lend*

No-tax-return mortgages for investment properties — what actually exists in 2026 (from a loan originator)

See this question a lot on here. People think they're stuck because their taxes show low income. You're not. Here's what exists:

FOR INVESTMENT PROPERTIES (rentals):

DSCR Loan — most common, most investor-friendly
- No income docs whatsoever
- Qualifies on property rent income
- 30-year fixed, up to 80% LTV on purchase
- 620+ credit, 20–25% down
- Works for LLCs

FOR PRIMARY RESIDENCE OR INVESTMENT (based on your income, not property):

Bank Statement Loan
- 12 or 24 months of personal/business bank statements
- Lender averages your deposits
- Good for: business owners with strong revenue but high write-offs

1099 Loan
- Uses 1099s from last 1–2 years
- No tax returns, no W-2s
- Good for: contractors, freelancers, gig economy

P&L Loan
- CPA-prepared profit & loss statement (12 months)
- No tax returns needed
- Fewer lenders offer this but it exists

What to watch out for:
- Non-QM loans (which most of these are) carry slightly higher rates than conventional — typically 0.5–1.5% premium
- They do still check credit and require reserves (liquid assets = 3–6 months of payments)
- Some are interest-only options if you want lower payments

The landscape has shifted a lot. The idea that you "need 2 years of tax returns to get a mortgage" is basically a conventional-only rule. Non-QM lenders have built entire product lines around alternative documentation.

*NMLS #2067609 | Licensed in CA & MO | Not licensed in Kansas | Not a commitment to lend*

May 2026 housing update: homes sitting longer = more negotiating power for investors. Here's the financing angle.

Just listened to the BiggerPockets May 2026 housing market update episode. Homes are sitting on market longer than they have in years. Spring 2026 isn't following the usual seasonal script.

What this means for investors from a financing perspective:

1. More price concessions = better entry points for DSCR math
Higher days-on-market gives you room to negotiate closer to your target price. That improves your rent-to-purchase-price ratio and makes DSCR qualification easier.

2. Sellers more open to seller concessions
In a slower market, you can negotiate closing cost credits. On an investment property, that might mean 2–3% of the purchase price back — which goes directly toward your reserves or next deal.

3. Rate buydowns are back in play
With more motivated sellers, seller-paid 2-1 buydowns or permanent rate buydowns are becoming a negotiating tool again. On a $300K investment property, a 1-point buydown costs the seller ~$3K and drops your rate ~0.25%.

4. The cash flow test gets easier
If prices soften even modestly in your target market, the DSCR math improves. The rent stays the same — but a lower purchase price means a smaller loan and lower PITIA. That 1.0x DSCR threshold gets easier to clear.

Slower markets are usually better for buyers willing to move. The financing tools haven't changed — but the negotiating position has shifted.

Running DSCR numbers for anyone who wants to see if their target property clears the threshold.

*NMLS #2067609 | Licensed in CA & MO | Not licensed in Kansas | Not a commitment to lend*

There's one number that determines if a rental property qualifies for financing.

It's called DSCR — and if you're investing in real estate without knowing this formula, you're leaving options on the table.

DSCR = Monthly Rent ÷ Monthly Payment

If that number is 1.0 or higher:
✅ The property pays for itself
✅ You qualify for a 30-year fixed loan
✅ No W-2s, tax returns, or income verification needed

Real example from a Kansas City deal I helped close recently:

Rent: $1,650/mo
Payment (PITIA): $1,190/mo
DSCR: 1.39 — approved.

The investor was self-employed.
His taxes showed almost no income.
Didn't matter.

The BiggerPockets podcast just dropped an episode called "If a Rental Doesn't Pass This Test, Don't Buy It."

The test they're talking about? Cash flow.

And the loan built around that test? DSCR.

If you're analyzing deals and wondering if you'd qualify — send me the numbers. I'll run them for free.

What market are you buying in right now?

#DSCRLoan #RealEstateInvesting #InvestorFinancing #NonQM #MortgageLoanOriginator

Jermaine Fields | NMLS #2067609 | NEXA Lending | CA & MO Licensed
*Not a commitment to lend. Not licensed in Kansas.*

7 rentals in 2 years.

That's what the latest BiggerPockets podcast episode featured — an investor who built his portfolio in an affordable midwest market while living in high-cost New Jersey.

How?

The BRRRR method + DSCR financing.

Here's how the financing side works:

PHASE 1 → Hard money / bridge loan
Closes fast on distressed properties. Funds both the purchase AND the rehab. 6–12 month term.

PHASE 2 → DSCR refinance
Once rehabbed and rented, refinance into a 30-year fixed.
No income docs. Qualifies on the rent.
Pull your cash back out. Repeat.

The math on a typical KC deal:
→ Purchase + rehab: $77K total in
→ ARV: $105K
→ DSCR refi at 75% LTV: $78,750
→ Cash pulled back out: ~$1,750
→ Monthly cash flow after refi: ~$430/mo
→ Capital recycled: ~100%

That's the model.

The key is the DSCR refi — it doesn't care about your W-2 or tax returns. It cares about the rent.

Affordable markets + BRRRR + DSCR = scalable.

Which affordable market are you watching right now?

#BRRRR #DSCRLoan #RealEstateInvesting #InvestorFinancing #KansasCity

Jermaine Fields | NMLS #2067609 | NEXA Lending | CA & MO Licensed
*Not a commitment to lend. Not licensed in Kansas.*

Your tax return is not your income.

But try telling that to a conventional lender.

If you're self-employed and want to invest in real estate, here's what your actual options look like in 2026:

DSCR Loan → For investment properties
Qualifies on RENT INCOME, not yours.
Perfect if you're buying rentals.
No income docs at all.

Bank Statement Loan → For any property type
12–24 months of deposits = your income.
Ignores write-offs entirely.
Great for business owners.

1099 Loan → For contractors and freelancers
Uses your 1099s, not your 1040.
1–2 years of 1099s qualifies you.

P&L Loan → For business owners with a good CPA
12-month profit & loss statement only.
No tax returns. Period.

The idea that self-employed people "can't get a mortgage" is a myth from the pre-2010 era.

Non-QM lenders built entire product lines to solve this exact problem.

If your taxes show $40K income but your deposits show $180K — the right lender uses the $180K.

If your property generates $1,800/mo in rent and your payment is $1,500/mo — the DSCR lender doesn't care what's on your 1040.

Which one of these fits your situation?

#SelfEmployed #NonQM #DSCRLoan #MortgageTips #RealEstateInvesting

Jermaine Fields | NMLS #2067609 | NEXA Lending | CA & MO Licensed
*Not a commitment to lend. Not licensed in Kansas.*

The BiggerPockets podcast asked: "What if you could buy a $500K/year income stream today?"

Let me show you the math from a financing lens.

$500K/year = $41,667/month in rental income.

At $1,400/month average net cash flow per door (affordable market SFR):
→ You need roughly 30 doors.

At $1,200/month average:
→ You need roughly 35 doors.

That sounds like a lot. But here's how financing makes it achievable:

DSCR loans have no cap on the number of properties.
(Conventional financing stops at 10 loans — most people don't know this)

Each property qualifies on its own rent.
Your growing portfolio doesn't hurt your ability to qualify for the next one.

Buy in affordable markets where DSCR math works.
In LA or SF, rent rarely covers payment. In KC, Detroit, and STL — it often does by a wide margin.

Use BRRRR to recycle capital.
If you're pulling back your down payment on each deal, you're not starting from zero each time.

Scale is not magic. It's compounding + the right loan structure.

Where are you in your portfolio right now?

#RentalIncome #PortfolioBuilding #DSCRLoan #RealEstateInvesting #FinancialFreedom

Jermaine Fields | NMLS #2067609 | NEXA Lending | CA & MO Licensed
*Not a commitment to lend. Not licensed in Kansas.*

Homes are sitting on market longer than they have in years.

BiggerPockets just released their May 2026 housing update — and for investors, this is actually good news.

Here's what a slower market means for your financing:

More negotiating power on price
→ Lower purchase price = smaller loan = easier DSCR math

Seller concessions are back
→ Ask for 2–3% back in closing costs
→ Use it to cover reserves or lower your cash in

Seller-paid rate buydowns are possible again
→ On a $250K investment property, a 1-point buydown = $2,500 from seller
→ Drops your rate ~0.25% for the life of the loan

The cash flow test gets easier
→ If prices soften even 5%, PITIA drops
→ Same rent + lower payment = better DSCR = better cash flow

Markets don't wait for perfect conditions.

The investors who move when others are waiting are the ones who look back 5 years later and say "that was the window."

Are you actively buying right now, or watching from the sidelines?

#HousingMarket2026 #RealEstateInvesting #DSCRLoan #InvestorMindset #MortgageLoanOriginator

Jermaine Fields | NMLS #2067609 | NEXA Lending | CA & MO Licensed
*Not a commitment to lend. Not licensed in Kansas.*