Understanding DSCR Loans for Commercial Real Estate
- Nate Jones, CPCU, ARM, CLCS, AU
- Oct 15
- 2 min read
In 2025, DSCR loans (Debt Service Coverage Ratio loans) are one of the most popular financing tools for commercial real estate investors. Whether you're buying an office building, retail strip mall, or multifamily property, DSCR loans offer a flexible path to funding—especially for those with non-traditional income.
Here’s what you need to know.
What Is a DSCR Loan?
A DSCR loan is a type of non-QM (non-qualified mortgage) that evaluates a property’s ability to generate income rather than the borrower’s personal financials. The key metric is the Debt Service Coverage Ratio, calculated as:
DSCR = Net Operating Income (NOI) ÷ Annual Debt Service
For example, if a property earns $150,000 in NOI and has $120,000 in annual debt payments, the DSCR is: 1.25, meaning the property generates 25% more income than needed to cover its debt.
Why DSCR Loans Matter
Unlike traditional loans that require W-2s, tax returns, and personal income verification, DSCR loans focus on the property’s cash flow. This makes them ideal for:
Self-employed investors
Investors with multiple properties
Those scaling portfolios quickly
Typical DSCR Loan Requirements
Minimum DSCR: 1.20–1.35 depending on property type
Credit Score: 660–700+ preferred
Down Payment: 20–30%
Reserves: 6–12 months of debt service
Eligible Properties: Office buildings, retail centers, warehouses, mixed-use, multifamily (5+ units)
Benefits of DSCR Loans
No personal income verification
Faster approvals and closings
Ideal for rental and income-producing properties
Supports refinancing and cash-out strategies
Protect Your DSCR-Financed Property with Wexford Insurance
Once your DSCR loan is approved, protecting your investment is essential. Wexford Insurance offers tailored coverage for Apartments, office buildings, retail centers, warehouses, hotels, and mixed-use buildings
Lessors risk insurance for leased properties
Business interruption coverage
Optional add-ons like flood, cyber, and ordinance coverage
Final Thoughts
DSCR loans offer a flexible, income-based path to commercial real estate financing. With the right lender and insurance partner, you can scale your portfolio and protect your assets. Contact Wexford Insurance today to get started.
FAQs
1. What is a good DSCR for loan approval?
Most lenders require a DSCR of 1.20 or higher, depending on the property type.
2. Can I get a DSCR loan with low personal income?
Yes—DSCR loans focus on property income, not personal income.
3. Does Wexford Insurance cover DSCR-financed properties?
Absolutely. Wexford provides full coverage for properties financed through DSCR loans.