What Terms and Guidelines Do DSCR Loans Have?
Familiar loan structures, plus a few built for investors. The DSCR programs we read publish 30-year loans, adjustable-rate loans that start fixed for five or seven years, interest-only options and, at one lender, a 40-year fixed term. Each lender sets its own guidelines for the ratio, down payment, credit and prepayment, so the terms below are what lenders publish, not a standard.
Last updated October 21, 2026Loan length and rate type
- 30-year: published by all four programs we read, and listed as fixed-rate by three.
- 40-year fixed: offered by one lender.
- Adjustable-rate: 5/1 and 7/1 ARMs at one lender, 5/6 and 7/6 ARMs at another, 5/1 and 10/1 ARMs at a third, and 6-month and 1-year adjustable options at a fourth.
In those names the numbers describe the rate, not the length of the loan. One lender says its 5/1 and 10/1 ARMs have a rate that's fixed for the first 5 or 10 years; the 6-month and 1-year options describe how the rate adjusts. Ask each lender for the full term of the loan.
Interest-only and amortization
Four of the programs we read offer interest-only options, where early payments cover interest only, which lowers the payment the ratio is measured against; one lists a 5-year interest-only option. Loans can also be fully amortizing, paying down the balance from the start; one lender lists its ARMs that way. One lender's short-term rental loan lists fixed-rate, adjustable, fully amortizing, interest-only or balloon structures. Ask how long an interest-only period lasts and what the payment becomes after it.
Prepayment terms
One lender's prepayment penalty ends after year 3; another lets you pay a higher fee or rate for a low or no penalty; a third offers no-penalty options. See prepayment penalties on a DSCR loan.
The guidelines that decide whether you qualify
- Ratio: one lender publishes a minimum as low as 0.8; another publishes none and funds below 1.0 with reserves.
- Down payment: published limits mean 15% to 25% down on a purchase.
- Credit: published minimums run from 620 to 700.
- Loan size: two lenders publish a $100,000 minimum.
- Other help: one lender allows gift funds and up to 6% in seller concessions.
What to ask a lender
- Which terms do you offer, and does the rate change between them?
- Is interest-only available, for how long, and what happens after?
- What prepayment penalty comes with each option?
| Terms | 30-year at all four programs we read, fixed-rate at three; 40-year fixed at one |
|---|---|
| Adjustable | 5/1, 7/1, 10/1, 5/6 and 7/6 ARMs, plus 6-month and 1-year options; the numbers are rate periods, not loan length |
| Interest-only | Offered by four programs we read |
| Prepayment | Ends after year 3 at one; buy-down or no-penalty options at others |
| Guidelines | Set by each lender: ratio, down payment, credit, loan size |
Related questions
Sources
- https://www.kiavi.com/loans/dscr
- https://www.griffinfunding.com/non-qm-mortgages/dscr-loans/
- https://angeloakms.com/programs/investor-cash-flow-mortgage-program/
- https://limaone.com/rental/detail/
Sourced from licensed loan officers and brokers in the FreeRateUpdate network.
Educational information only, not individualized financial or legal advice. Program details and rates change; verify current terms with a licensed loan officer before making a decision.