Why this scenario matters
DSCR lending decisions often hinge on small assumption changes. A pre-screen model reduces wasted applications and helps you negotiate from a stronger position.
Baseline modeling framework
- Start with conservative effective rent, not optimistic pro-forma rent.
- Include vacancy, management, maintenance, tax, insurance, and HOA when applicable.
- Run at least three rate scenarios and two vacancy scenarios.
- Verify lender overlays before committing capital.
Practical checklist
- Export your assumptions before every lender call.
- Keep a stress-case DSCR threshold of at least 1.15 for downside resilience.
- Compare payment structure, not just headline rate.
Related guides
FAQ
Q: Which loan type has lower rates? A: DSCR loans typically price 0.25–0.5% lower than bank statement loans because rental income is more predictable than self-employed income.
Q: Can I use both loan types in a portfolio? A: Yes. Use bank statement loans for properties with weak rental income and DSCR loans for stabilized rentals to optimize your overall cost of capital.
Q: What if my property doesn’t cash-flow yet? A: Bank statement loans may work better for value-add plays or properties with temporary vacancy. DSCR requires current rental income to qualify.
Next Step
Use the DSCR Calculator to see which loan type better fits your property’s current income profile.