Investing in small multifamily properties like duplexes or fourplexes is a popular strategy for building passive income and scaling a real estate portfolio. But traditional mortgages often fall short for investors—especially when income verification becomes a roadblock. That’s where DSCR loans come in.
If you’re wondering whether you can use a DSCR loan to finance a 2- to 4-unit property, the answer is a resounding yes—provided the property meets the right cash flow metrics.
Want to see if your deal qualifies for a DSCR loan? Submit your loan scenario today.
What Is a DSCR Loan?
A DSCR (Debt Service Coverage Ratio) loan is a mortgage designed for real estate investors. It allows you to qualify based on the property’s income—not your personal W2s, pay stubs, or tax returns.
Instead of looking at your personal DTI (debt-to-income), lenders focus on whether the property’s income can cover its mortgage payment. This makes DSCR loans ideal for:
- Self-employed investors
- House hackers transitioning to full investors
- Seasoned landlords scaling their portfolios
- Anyone struggling with traditional income docs
To learn more about how DSCR loans work, check out our DSCR Loans 101 Guide.
Can DSCR Loans Be Used for Duplexes and Fourplexes?
Absolutely. DSCR loans are commonly used to finance:
- Duplexes (2 units)
- Triplexes (3 units)
- Fourplexes (4 units)
These are classified as residential properties, which makes them eligible under most DSCR loan programs. In fact, many DSCR lenders specialize in 1–4 unit investment properties:contentReference[oaicite:0]{index=0}.
However, the property must meet one critical requirement: It must be non-owner occupied. DSCR loans are business-purpose loans, so you cannot live in one of the units.
Why DSCR Loans Are Great for Small Multifamily Investments
Here’s why DSCR loans are a strong match for duplex and fourplex deals:
✔ No Personal Income Verification
You don’t need to show W2s or tax returns. If the property cash flows, that’s enough.
✔ Close in Your LLC
Want asset protection? Most DSCR lenders allow you to close in your LLC’s name—streamlining tax planning and liability protection.
✔ Unlimited Property Count
Unlike conventional lenders that cap you at 10 properties, DSCR lenders don’t impose a property limit.
✔ Fast Closing Timeline
Since these loans rely on property performance rather than your financials, many close in 3–4 weeks, some even faster with digital lenders.
✔ Higher Cash Flow Potential
With multiple units, it’s easier to hit your target DSCR (usually 1.2 or higher) even if one unit is vacant or under market rent.
DSCR Requirements for Duplexes & Fourplexes
Here’s what you’ll typically need to qualify:
| Requirement | Typical Standard |
|---|---|
| Minimum DSCR | 1.20 (some allow 1.0) |
| Credit Score | 640+ (680+ preferred) |
| Down Payment | 20–25% |
| Property Type | 1–4 unit, investor-owned |
| Ownership | LLC or personal name |
Want help qualifying your duplex or fourplex deal? Submit your scenario now.
Real-World Example
Investor Profile: Elena, a self-employed graphic designer
Deal: Fourplex in Tampa, FL generating $4,800/mo
Loan: 30-year fixed DSCR loan with 25% down
DSCR: 1.35
Result: Approved with no income docs, closed in 22 days.
Things to Watch Out For
While DSCR loans are powerful, here are a few caveats:
- No Owner-Occupancy: You can’t live in the property—even one unit.
- Rent Must Support the Payment: Lenders use market rent or actual leases—whichever is lower.
- Prepayment Penalties: Expect a 3–5 year step-down penalty on most DSCR loans.
- Appraisal Complexity: Fourplex appraisals can be more involved—budget for a higher appraisal fee.
Related Content to Deepen Your Strategy
- DSCR Loans for Multi-Unit Properties: Financing Duplexes and Fourplexes
- Refinancing with DSCR Loans: Unlocking Equity in Your Investment Properties
- DSCR Loans in Florida
FAQs
No. DSCR loans prohibit any owner occupancy. All units must be rented out or available for rent.
That’s okay. Lenders can use market rent based on the appraisal to calculate DSCR.
Some lenders allow Airbnb or short-term rental income, especially if you provide data from tools like AirDNA. Learn more in our Airbnb DSCR loan guide.
Final Takeaway
If you’re eyeing a duplex or fourplex as your next investment, a DSCR loan could be your best financing option—especially if you’re self-employed, scaling fast, or seeking to avoid the headaches of traditional income verification.
By qualifying based on the property’s rental performance, you can focus on deals that cash flow—without worrying whether your W2, DTI, or tax strategy might get in the way.
Ready to get pre-qualified? Start your loan scenario here.
Leverage the income of your next duplex or fourplex—not your personal income.
Read Next
- How to Qualify for a DSCR Loan Without Traditional Income Verification
- From First Rental to Real Portfolio: The DSCR Playbook
- Advanced DSCR Loan Strategies for Scaling Your Portfolio
Our advise is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.
