DSCR Loans for Commercial Properties: Financing Office and Retail Investments

Introduction: Unlocking Commercial Real Estate with DSCR Loans

Commercial real estate offers big opportunities—but it’s often out of reach for investors using traditional financing. High documentation requirements, slow approval timelines, and personal income scrutiny can stall deals.

That’s where DSCR loans for commercial properties come in.

These loans let investors qualify based on the income generated by the property—not their personal income, W2s, or tax returns. Whether you’re purchasing an office building, retail strip center, or mixed-use space, DSCR financing makes it possible to scale into commercial real estate faster and with fewer obstacles.

What Is a DSCR Loan for Commercial Real Estate?

A DSCR loan (Debt Service Coverage Ratio loan) is a commercial mortgage that uses the property’s income to determine loan eligibility, rather than requiring the borrower’s employment or income verification.

DSCR Formula:

DSCR = Net Operating Income (NOI) / Annual Debt Service

• NOI: Gross rent – operating expenses (excluding mortgage)
  
• Debt Service: Annual principal + interest payments
  

Example:

• Net Operating Income: $120,000/year
  
• Annual Debt Service: $100,000
  
• DSCR = 1.2
  

A DSCR of 1.2 means the property earns 20% more than it costs to finance—exactly what lenders want to see for safe lending.

Why DSCR Loans Are Ideal for Commercial Investors

✅ No Personal Income Verification

Lenders won’t ask for W2s, pay stubs, or tax returns. They care about the property’s ability to cover the mortgage.

✅ Works for LLCs and Business Entities

DSCR loans can be made to LLCs, corporations, or trusts, offering better legal protection and scalability.

✅ Fast Approvals

Unlike bank loans or SBA financing, DSCR loans close faster—often within 3–5 weeks.

✅ Refinance or Cash-Out Opportunities

Ideal for investors looking to stabilize and refinance value-add properties without jumping through traditional underwriting hoops.

Types of Commercial Properties Eligible for DSCR Loans

• Office buildings (medical, professional, co-working)
  
• Retail strip centers
  
• Standalone commercial buildings (restaurants, clinics, gas stations)
  
• Mixed-use buildings (residential + commercial)
  
• Flex/industrial warehouses
  
• Multi-tenant commercial spaces
  

⚠️ Note: Owner-occupied commercial or vacant land may require SBA or bridge financing instead.

Typical DSCR Loan Requirements for Commercial Properties

Best Markets for DSCR-Eligible Commercial Deals

These U.S. cities offer strong fundamentals, rent growth, and tenant demand for commercial DSCR financing:

• Dallas–Fort Worth, TX
  
• Atlanta, GA
  
• Charlotte, NC
  
• Orlando, FL
  
• Phoenix, AZ
  
• Columbus, OH
  
• Nashville, TN
  

Look for retail corridors, suburban office parks, and infill mixed-use zones in growing metros with stable cap rates.

Real-World Example: Using DSCR to Buy a Retail Plaza

Investor: Lisa, a multi-family investor expanding into commercial
Property: $1.1M strip mall with 6 tenants in Columbus, OH
Gross Rent: $13,000/month
Operating Expenses: $3,000/month → NOI = $10,000/month
Annual Debt Service: $96,000
DSCR: $120,000 ÷ $96,000 = 1.25

Outcome: Closed in LLC with 30% down and no income docs. Now generating $3,000+/month in net cash flow.

DSCR Loans vs SBA Loans: What’s the Difference?

✅ Choose DSCR if you’re investing in a rental commercial property.
✅ Choose SBA if you’re running a business from the space you own.

Best Lenders for Commercial DSCR Loans (2025)

• CoreVest
  
• Lima One Capital
  
• Visio Lending (STR + commercial friendly)
  
• Velocity Mortgage Capital
  
• Kiavi (select commercial offerings)
  
• AVANA Capital
  
• Private money commercial brokers
  

💡 Tip: Some DSCR lenders will consider properties with partial vacancy, as long as projected NOI still supports the loan.

Tips to Get Approved for a Commercial DSCR Loan

• Provide a current rent roll + leases
  
• Submit 12-month trailing income and expenses
  
• Keep your credit score above 680
  
• Prepare for 25–35% down payment
  
• Show stabilized income or a clear lease-up plan
  
• Have 6–12 months of reserves in liquid assets
  

Final Thoughts: Finance Commercial Real Estate on Your Terms

DSCR loans for commercial properties open the door for investors who want to scale into office, retail, or mixed-use spaces without the roadblocks of bank or SBA underwriting.

If your property generates consistent income—and you have the down payment and credit to match—you can close in weeks and grow your CRE portfolio with confidence.