Real estate investors love DSCR loans because they qualify based on rental income—not personal income. But even though DSCR loans don’t require W-2s or tax returns, lenders still need clear documentation to verify your property’s cash flow.
In this guide, we’ll break down exactly how to document rental income for a DSCR loan—whether you’re purchasing a new investment or refinancing an existing property.
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What Is a DSCR Loan?
A Debt Service Coverage Ratio (DSCR) loan allows investors to qualify for financing based on the cash flow of the property, not their personal income. The core metric is:
DSCR = Gross Rental Income / PITIA (Principal, Interest, Taxes, Insurance, HOA)
Most lenders want a DSCR of 1.0 or higher. Some require 1.20+ to ensure a buffer for vacancies or expenses.
Why Rental Income Documentation Matters
Even though DSCR loans are “no-income-verification” from the borrower’s side, property income must be documented clearly to prove the loan is supportable. If the lender can’t verify that the rent covers the mortgage, the loan gets denied or reduced.
Use our DSCR Calculator to estimate your property’s qualifying income in minutes.
3 Main Ways to Document Rental Income
1. Current Lease Agreement
If the property is already rented:
- Provide a signed lease agreement showing the current monthly rent.
- Lease should be valid for at least 6–12 months.
- Must show tenant name, term, rent amount, and signatures.
Pro tip: If rent is below market, the lender may still use the lower lease amount unless policy allows “market rent” fallback.
2. Appraisal Rent Schedule (Form 1007)
If the property is vacant or newly purchased, most DSCR lenders will order:
- A Form 1007 Rent Schedule from the appraiser.
- This includes market rent estimates based on comps.
Some lenders use the lower of lease or market rent, while others may accept market rent if the lease is outdated or nonexistent.
3. Short-Term Rentals (Airbnb, VRBO)
For properties operated as short-term rentals:
- Lenders may accept 12-month AirDNA or Airbnb income history.
- Some allow projected income based on market data.
- Expect more scrutiny—especially for seasonal markets or high vacancy risk.
Additional Documents Lenders May Request
- Proof of property insurance
- Utility bills or tax records to confirm non-owner occupancy
- LLC operating agreement (if financing in a business name)
- Bank statements showing down payment or reserves (6–12 months of PITIA)
What If the Property Isn’t Rented Yet?
That’s okay!
Lenders typically use market rent from the appraisal (Form 1007) for vacant or just-purchased properties. However:
- The property must be rent-ready (no major rehab needed).
- DSCR calculation still applies using estimated income.
Documentation Best Practices
To improve approval odds and streamline underwriting:
- Avoid expired leases. Make sure tenants are under contract.
- Use licensed appraisers familiar with rental comps.
- Clarify STR vs. LTR income—be transparent about your strategy.
- Have reserves ready. Most lenders require 6–12 months of mortgage payments in reserves, especially for cash-out refinances.
When to Use a DSCR Loan
If you’re:
- Self-employed or earn non-W2 income
- Scaling a rental portfolio
- Buying in an LLC or partnership
- Doing a cash-out refinance for another investment…
…DSCR loans are one of the most flexible options available.
See how they compare to traditional mortgages.
FAQs: Documenting Rental Income for DSCR Loans
Not necessarily. Lenders can use the appraisal’s market rent if the property is vacant.
You may need to provide historical income (Airbnb/VRBO) or use a lender who accepts projected STR income via platforms like AirDNA.
No—only rent schedules from a licensed appraiser (Form 1007) or actual leases are accepted.
Most lenders ask for 12 months of short-term rental history. If unavailable, they may allow market projections with stricter terms.
Start Your DSCR Loan the Right Way
Don’t let incomplete income docs stall your next deal. Work with a lender who understands real estate investors.
Get matched with a DSCR lender now
Submit your rental scenario and get personalized quotes
Read Next
- DSCR Loans for Short-Term Rental Properties
- How to Qualify for a DSCR Loan Without Traditional Income Verification
- Refinancing with DSCR Loans: Unlocking Equity
- DSCR Loans for Self-Employed Investors
Let’s unlock more opportunities—one rental at a time.
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.
