80+ DSCR loan, rental property financing, and real estate investor terms — defined in plain English by lenders who close these loans every day.
A short-term-rental data platform that provides market-level revenue projections from Airbnb and VRBO listings. DSCR underwriters accept AirDNA projections (typically discounted to 75–80%) as qualifying income on STR properties without rental history.
A licensed appraiser's professional opinion of property market value. DSCR loans use Form 1004 (SFR), 1025 (2–4 unit), or 1073 (condo). All DSCR appraisals include a Form 1007 rent comparable used to compute DSCR.
A property's projected value after planned rehab is complete. Hard money lenders lend against ARV; BRRRR exits depend on ARV supporting the cash-out refi.
A loan that qualifies on the borrower's liquid assets rather than income. Common for retirees and high-net-worth borrowers. Different from DSCR (which is property-cash-flow-based).
A mortgage that allows a buyer to take over the seller's existing loan terms (rate, balance) at sale. Most DSCR loans are not assumable; FHA and VA loans typically are.
A non-QM loan that qualifies on 12–24 months of bank deposits (used as a proxy for income) instead of tax returns. Used by self-employed borrowers buying primary residences. DSCR is generally a better fit for investment property. See DSCR vs Bank Statement →
A short-term (typically 12-month) interest-only loan used to "bridge" the gap between two transactions — most commonly buying a new property before selling an existing one. Bridge loans close in 14–21 days vs 30–45 for conventional loans. See California Bridge Loans →
Buy, Rehab, Rent, Refinance, Repeat. A real estate investment strategy where investors buy distressed property with hard money or cash, rehab it, rent it out, refinance into a long-term DSCR loan to recover capital, and repeat. The DSCR cash-out refi is the critical link. See BRRRR DSCR Guide →
A property's annual net operating income divided by its market value, expressed as a percentage. A $400K property with $32K NOI has an 8% cap rate. Used to compare investment yields across properties and markets.
Major non-recurring property expenses — roof, HVAC, water heater, plumbing replacement. Investors typically reserve $200–400/month/property for CapEx, separate from regular maintenance.
Annual pre-tax cash flow divided by total cash invested (down payment + closing costs + rehab). The most common return metric for buy-and-hold rental investors.
A refinance that pays off an existing mortgage and pulls additional equity out of the property as cash. DSCR cash-out refis cap at 75% LTV in 2026. Used to fund next acquisitions, recover BRRRR capital, or consolidate higher-rate debt. See DSCR Cash-Out Guide →
The form summarizing the final loan terms, monthly payment, and closing costs, delivered to the borrower at least 3 business days before closing. Replaces the old HUD-1 settlement statement.
A condominium unit inside a hotel-operated building (front desk, housekeeping, on-site rental program). Examples: Las Vegas Strip towers, Disney-area resort condos. Condotels are non-warrantable; only specialty DSCR programs finance them, capping at 70% LTV. See Condotel DSCR Guide →
A non-government-backed mortgage that meets Fannie Mae or Freddie Mac (GSE) underwriting. Conventional investment property loans require full income documentation and tighter underwriting than DSCR.
Upfront fees (1 point = 1% of loan amount) paid to the lender at closing in exchange for a lower interest rate. Common on DSCR loans to buy down rate by 0.125–0.500% per point.
A ratio that compares a property's gross monthly rent to its total monthly debt obligation (PITIA). DSCR = Gross Rent ÷ PITIA. A 1.0 DSCR means rent exactly covers the mortgage payment; above 1.0 is positive cash flow; below 1.0 means rent doesn't cover the payment. The qualifying metric for DSCR loans. See How to Calculate DSCR →
A non-QM investment property loan that qualifies on the property's rental income vs PITIA — not the borrower's personal income. No tax returns, W-2s, or DTI required. Available for purchase, rate-and-term refinance, and cash-out refinance on rental properties. See 2026 DSCR Requirements →
The ratio of monthly debt payments to gross monthly income, used in conventional QM mortgage underwriting. DSCR loans do NOT use DTI — they qualify on property cash flow instead. This is the key reason DSCR loans suit self-employed and high-DTI investors.
A clause allowing the lender to call the entire loan due if title transfers. Typically triggered when an investor deeds a property from personal name to LLC; managed by refinancing into a new DSCR loan to the LLC simultaneously.
A 2-unit residential property. Counts as small multifamily for DSCR purposes; eligible for standard DSCR pricing and up to 80% LTV.
The difference between a property's market value and outstanding mortgage balance. Built through principal pay-down, appreciation, or value-add rehab. Pulled out via cash-out refinance or HELOC.
A neutral third-party account holding funds (or documents) during a real estate transaction. At closing, escrow disburses funds to the seller, lender, and various service providers. DSCR loans may also include monthly escrow accounts for property tax and insurance payments.
A government-insured mortgage allowing 3.5% down for primary residences. Not available for investment property — DSCR is the investor equivalent.
A credit score ranging 300–850 calculated from credit report data by Fair Isaac Corporation. DSCR lenders pull tri-merge (Equifax, Experian, TransUnion) and use the middle of three scores. 620 is the typical floor; 720+ unlocks the best DSCR pricing. See DSCR FICO Matrix →
A real estate strategy involving buying distressed property, renovating it, and selling within 6–18 months for capital gain. Typically financed with hard money. Different from BRRRR which holds for rental.
A FEMA-designated area at elevated flood risk. Properties in flood zones AE, A, V, etc. require flood insurance, which can significantly impact PITIA and DSCR.
A non-U.S. citizen and non-permanent-resident borrower. Foreign nationals can qualify for DSCR loans at 70% max LTV, typically requiring a U.S. bank account, two foreign credit references, and U.S.-located reserves. Pricing runs 0.50–1.00% above U.S.-citizen DSCR rates. See Foreign National DSCR →
The Fannie Mae form used by appraisers to estimate market rent on a 1-unit property. The 1007 rent estimate becomes the numerator in the DSCR ratio.
The appraisal form used for 2–4 unit residential properties. Includes a comparable rent schedule for each unit.
A 4-unit residential property. The largest property still classified as residential (not commercial) for DSCR purposes; eligible for 80% LTV and standard DSCR pricing.
Property price divided by annual gross rent. A $300K property renting for $30K/year has a 10x GRM. Quick valuation shorthand for rental properties.
Short-term, asset-based real estate financing from private lenders, typically 6–24 months at 9–13% interest. Used for fix-and-flip or BRRRR acquisitions where speed (5–10 day close) matters more than rate. Refinanced into DSCR after rehab. See DSCR vs Hard Money →
A revolving credit line secured by property equity, typically variable-rate (Prime + margin). HELOCs on investment property are rare and capped at 65–70% CLTV. Often replaced by DSCR cash-out refis for serious investors.
A monthly escrow holding portion of the borrower's mortgage payment to fund property taxes and insurance when due. Some DSCR programs allow waived impounds at 75% LTV or below for a small fee.
A loan structure where the borrower pays only interest (no principal) for a set period — typically 5 or 10 years on a DSCR loan. The IO payment is 25–35% lower than a fully amortizing P&I payment, lifting both monthly cash flow and qualifying DSCR. See Interest-Only DSCR →
The annualized rate of return on an investment over a holding period, accounting for cash flows and appreciation. More comprehensive than cap rate or cash-on-cash for long-term hold modeling.
A tax processing number issued by the IRS to non-citizens who don't qualify for a Social Security Number. ITIN borrowers (often undocumented residents or foreign nationals) can qualify for specialty DSCR loans, typically at 75% LTV with 660+ credit equivalent. See ITIN DSCR Loans →
A loan exceeding the conforming loan limit set by the FHFA (in 2026, generally $766,550–$1,149,825 depending on county). DSCR loans above $1M function as jumbo non-QM products.
30-second eligibility check. No credit pull. No commitment.
Check My Eligibility →A credit issued by the lender at closing to offset closing costs, in exchange for a higher interest rate. The inverse of discount points.
A legal entity that holds title to investment property, providing liability separation between the property and the owner's personal assets. DSCR loans are routinely made to LLCs at the same rate as personal-name loans, with members providing personal guarantees. See LLC DSCR Guide →
The 3-page disclosure form delivered to the borrower within 3 business days of application, summarizing rate, monthly payment, and closing cost estimates. Used to comparison-shop DSCR lenders.
A rental property leased on monthly terms, typically with 12-month leases. Income is verified via the lease agreement or appraiser's market-rent estimate (Form 1007). The default DSCR property type.
The ratio of loan amount to appraised property value, expressed as a percentage. LTV = Loan Amount ÷ Appraised Value. A 75% LTV loan on a $400K property is $300K. DSCR loans typically cap at 80% LTV on strong-file purchases and 75% standard. See DSCR LTV Limits →
A building containing both residential and commercial space. DSCR programs may accept mixed-use if residential is the majority (typically 65%+ of square footage) at 70–75% LTV.
The regional database where real estate agents list properties for sale. Off-market deals don't appear on MLS.
A rental leased for 30–90 day stays, typically to traveling nurses, corporate clients, or insurance-displaced families. DSCR lenders treat MTR as STR for income calculation but accept actual booking history (Furnished Finder, Airbnb 30+ day) as documentation.
A residential property with multiple rental units. 2–4 unit multifamily qualifies for standard DSCR financing at the same rates as SFR; 5+ unit multifamily requires specialty DSCR programs at 70–75% LTV.
A DSCR loan variant that skips the rent-to-PITIA test entirely. Used when the property's market rent doesn't cover the mortgage payment (DSCR below 1.0). Typically caps at 70% LTV with a 660+ FICO requirement and 0.50–1.00% higher rate than a standard DSCR. See No-Ratio DSCR →
A property's annual rental income minus operating expenses (taxes, insurance, maintenance, vacancy, management) but before mortgage payments. NOI is the numerator in cap rate; gross rent is the numerator in DSCR.
A category of mortgages that don't meet the Consumer Financial Protection Bureau's "qualified mortgage" rules. DSCR loans, bank statement loans, ITIN loans, and foreign national loans are all non-QM products. They serve borrowers who can't qualify under standard DTI-based underwriting.
A loan secured only by the property itself, with no personal guarantee. If the borrower defaults, the lender's only remedy is foreclosure on the property. Available on DSCR at 60–65% LTV with 720+ FICO and $1M+ loan amounts; pricing runs 0.50–1.00% above standard DSCR.
A condo that fails one or more Fannie/Freddie eligibility rules. Conventional lenders typically refuse; DSCR programs accept non-warrantable condos at 75% max LTV with a small pricing premium.
IRS classification for a non-citizen who is not physically present in the U.S. for the substantial-presence test. Many DSCR lenders accept NRA borrowers; some bridge programs do not.
A federally designated low-income census tract where investors can defer capital gains tax by investing through a Qualified Opportunity Fund. Typically combined with DSCR financing for the long-term hold.
A fee charged by the lender for processing the loan, typically 1–2% of the loan amount. Common on DSCR loans, especially bridge and non-QM products.
The base interest rate on a loan at zero discount points and zero lender credit. Lenders quote rates at "par," below par (with discount points paid), or above par (with lender credit issued).
A non-citizen with lawful permanent residence in the U.S. (green card holder). Permanent residents qualify for DSCR loans at the same rates and LTV as U.S. citizens.
A contractual obligation from an LLC's member(s) to be personally liable for repayment of the LLC's loan. Almost universal on DSCR loans to LLCs. Members owning 20%+ of the LLC typically must sign.
Principal + Interest + Taxes + Insurance + Association dues (HOA). The full monthly housing payment used as the denominator in the DSCR ratio. PITIA differs from PITI by including HOA/condo fees.
A single loan secured by multiple rental properties. Used by investors with 5+ rentals to consolidate financing under one note. Often called a blanket DSCR loan when underwritten against aggregate rental income. See Portfolio DSCR →
A fee charged by the lender if the borrower pays off the loan early (via refinance or sale) within a defined window. DSCR loans typically carry 3- or 5-year step-down PPPs (e.g., 5%/4%/3%/2%/1% by year). 20% of original principal can usually be paid down annually without triggering. See PPP Guide →
A mortgage meeting CFPB's safe-harbor underwriting rules — full income documentation, DTI under 43%, no risky features. DSCR loans are non-QM by design.
A guarantee from the lender that the interest rate quoted will be honored at closing, typically for 30, 45, or 60 days. Locks longer than 60 days carry pricing premiums.
A provision in a portfolio/blanket loan allowing individual properties to be released (sold) without paying off the entire loan. Critical for portfolio investors who plan to sell properties over time.
Liquid assets (checking, savings, brokerage, retirement) the lender requires the borrower to document post-closing as a cushion. Standard DSCR reserve requirement is 6 months PITIA; cash-out refinances and sub-1.0 DSCR files require 9–12 months. Reserves are not paid to the lender — they remain in the borrower's account. See Reserves Guide →
The minimum ownership period required before a lender will use a property's new appraised value (vs original purchase price) for a refinance. DSCR cash-out seasoning is typically 3–6 months.
A loan secured by a property in subordinate position to the first mortgage. Less common on investment property; sometimes used to bridge equity gaps.
The federal Housing Choice Voucher program. Section 8 tenants pay a portion of rent based on income; HUD pays the rest directly to the landlord. Section 8 income is generally accepted as qualifying rent on DSCR loans.
A single-family detached home — the most common DSCR loan property type. SFRs qualify for standard pricing and the highest LTV tiers (up to 80%).
A rental property leased on nightly terms, typically through Airbnb, VRBO, or similar platforms. DSCR underwriters use AirDNA market projections at a 75–80% haircut to estimate qualifying income. Subject to local zoning and STR registration requirements. See STR DSCR Guide →
The renter occupying a property under a lease agreement.
The benchmark interest rate for U.S. Treasury notes maturing in 10 years. DSCR rates correlate strongly with 10-year Treasury yields; a 25bp rise in the 10-yr typically moves DSCR rates 20–35bp.
Legal ownership of a property, evidenced by a recorded deed. DSCR loans are recorded against the property's title at closing.
Insurance protecting the lender (lender's policy) and optionally the borrower (owner's policy) against defects in the property's title. Mandatory on DSCR loans.
A 3-unit residential property. Same DSCR eligibility as a duplex.
A zero-down mortgage available to qualifying veterans and active-duty service members for primary residences. Not for investment property.
The percentage of a rental's potential annual gross income lost to unoccupied periods. DSCR underwriters bake assumed vacancy into their analysis (typically 5–10% on LTR, 25–40% on STR).
A condominium that meets Fannie Mae and Freddie Mac eligibility rules — owner-occupancy ratio above 50%, no single owner controlling more than 25% of units, master insurance in place, no active litigation, etc. Warrantable condos qualify for standard DSCR pricing.
A strategy where investors find off-market distressed properties under contract and assign the contract to an end buyer for an assignment fee, without ever taking title.
A tax-deferral strategy under IRC Section 1031 that allows real estate investors to swap one investment property for another and defer capital gains tax. Bridge loans are commonly used to bridge 1031 timing constraints (45-day identification + 180-day close).