What is a DSCR loan?
A DSCR loan is an investment property loan where the lender looks mainly at whether the property's rent covers its payment, instead of qualifying the loan mostly on your personal income. DSCR stands for debt service coverage ratio: the property's rent or net operating income divided by its loan payment.
Who looks at them
Investors buying or refinancing a rental they will not live in, such as a single-family rental, a condo, a duplex or a fourplex. Some borrowers also look at DSCR loans when their tax returns do not show the income a conventional loan would need. Each lender decides which borrowers and properties it will consider.
Why the paperwork can differ
Under federal Regulation Z, credit to buy, improve or maintain a rental property that the owner will not occupy is treated as business-purpose credit, according to the Consumer Financial Protection Bureau's official interpretation. Business-purpose loans are generally exempt from Regulation Z, so you may not receive the Loan Estimate and Closing Disclosure forms used on a home loan. Ask the lender to put the rate, fees, prepayment terms and any interest-only period in writing.
The 14-day rule
The same CFPB interpretation says a property cannot be treated as non-owner-occupied if the owner expects to live in it for more than 14 days in the coming year. If you plan to live in one unit, ask about owner-occupied financing instead. See other loan options below.
What it is not
A DSCR loan is not a government program, and there is no single set of DSCR rules. Minimum ratios, down payments, credit requirements and reserves are set by each lender and investor. Nothing on this page is a rate quote or a promise that any loan is available.
DSCR loan calculator
Pick the method your lender uses. Many lenders on one- to four-unit rentals compare monthly rent with the full monthly payment, called PITIA. Commercial and larger multifamily loans more often use net operating income. Every field starts blank, and results are estimates, not an approval.
The price you are considering, or the appraised value on a refinance.
Use the figure your lender requires.
Enter the rate a lender quoted you. We do not publish rates.
Some DSCR loans have an interest-only period. Ask which payment the lender uses to figure the ratio.
Ask the lender what rent it counts: signed leases, an appraiser's market rent estimate or both. We do not estimate rent.
From the current tax bill.
A landlord or rental dwelling policy quote.
Used in the NOI method only.
NOI method only: owner-paid heat and utilities, snow removal, repairs, management and reserves. Taxes, insurance and HOA from above are added for you.
If a lender told you its minimum, enter it to see the largest loan this rent supports at that ratio.
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Monthly rent divided by monthly PITIA
A ratio of 1.00 means the rent or NOI exactly equals the payment it is compared with. Each lender sets its own minimum.
Two ways lenders figure DSCR
The name is the same, but the math is not. Ask which one your lender uses before you compare quotes.
| Method | Formula | Where you often see it |
|---|---|---|
| Rent / PITIA | Monthly rent divided by monthly principal, interest, property taxes, insurance and HOA dues | Loans on one- to four-unit rentals |
| NOI / debt service | Yearly net operating income divided by yearly principal and interest | Commercial loans and buildings with five or more units |
Rent / PITIA in plain terms
If the rent and the full payment are equal, the ratio is 1.00. Rent above the payment pushes it above 1.00, and rent below the payment pulls it under. Operating costs such as heat, snow removal and repairs are not part of this ratio, so it can look stronger than the property's real cash flow.
NOI / debt service in plain terms
This method subtracts vacancy and operating expenses first, then compares what is left with the loan payment. It is closer to how the property actually performs. Our rental property calculator shows NOI, cash flow and this ratio together.
Questions to ask a DSCR lender
DSCR loans vary more from lender to lender than most home loans. Ask each one the same questions and get the answers in writing.
- What minimum ratio do you require, and which method do you use?
- What rent do you count: leases, an appraiser's market rent or both?
- Do you count short-term rental income, and how do you document it?
- What down payment, credit score and cash reserves do you require?
- Is there a prepayment penalty, and how long does it last?
- Is there an interest-only period, and which payment sets the ratio?
- Can the loan close in an LLC's name, and will I have to sign for it personally?
- Which property types do you lend on: condos, plexes, rural lots with wells and septic?
Short-term rentals
If you plan to rent by the night, local rules come first. Anchorage requires short-term rental registration, and Palmer and Wasilla require permits. Read our Alaska short-term rental rules before you count on nightly income.
Check the lender's license
Residential mortgage lenders and loan originators are licensed through the Nationwide Multistate Licensing System. You can look up a company or individual on NMLS Consumer Access. We do not recommend specific lenders on this page.
DSCR loans compared with other ways to finance a rental
A DSCR loan is one option. Depending on your income, the property and whether you will live there, a lender may suggest something else.
Conventional investment loan
Qualifies mainly on your income, debts and credit, with the property's rent counted under the lender's rules. Ask a lender to compare it with a DSCR quote on the same property.
Owner-occupied 2 to 4 units
If you will live in one unit, FHA, VA, conventional and some AHFC loans may apply. For three- and four-unit properties, FHA requires a self-sufficiency test in HUD Handbook 4000.1: PITI divided by monthly net self-sufficiency rental income may not exceed 100 percent. That income is the appraiser's fair market rent from all units, including yours, minus the greater of the appraiser's vacancy and maintenance estimate or 25 percent of that rent. VA-backed purchase loans can be used on homes with up to four units when you intend to occupy the property as your home. See our investing guide, Alaska VA loans and Alaska home loans.
AHFC
Alaska Housing Finance Corporation's general requirements list conventional down-payment minimums of 10% for a duplex and 20% for a triplex or fourplex. AHFC loans are made through approved lenders and have their own occupancy rules. See AHFC general requirements.
Commercial loans
Buildings with five or more units are often financed with commercial loans, which commonly use the NOI method on this page. Terms vary widely by lender. James Cash is the team's commercial agent; talk commercial with James about 5+ unit, mixed-use, retail, office or land opportunities.
Need help with leasing or management after you buy? We can connect you with a trusted local property manager.
Find a rental to run the numbers on
No pop-ups and no automatic sign-ups. Use the contact form when you want help finding a property or checking one you have in mind.
Get a list of rentals for sale
Duplexes to fourplexes are often filed under ordinary home or commercial listings in the MLS, so a generic search misses many of them. Tell James or Ryan your areas, price range and unit count and they will set up an MLS email alert and point you to current inventory.
Investor value and rent check
Send an address or MLS number. We can pull recent comparable sales and list the leases, rent rolls and expense records to ask the seller for. You still run the numbers yourself; we do not predict rents or returns.
Talk with James or Ryan
James and Ryan can help you find rentals, pull recent sales, request leases and rent rolls from sellers and plan your financing deadlines in the purchase contract.
James Cash
Broker, Keller Williams Realty Alaska Group
Works with buyers, sellers and investors across Anchorage, Eagle River and the Mat-Su Valley.
james@herorealtygroup.com
Ryan Lunski
Licensed Alaska Real Estate Salesperson
A military veteran who works with buyers, investors and military families in Southcentral Alaska.
ryan@herorealtygroup.comWe are real estate agents, not lenders, accountants or attorneys. We can help you find and compare properties, request records from sellers and plan inspections and contract deadlines. A licensed lender, a CPA or tax advisor, and an Alaska attorney answer loan, tax and legal questions. You can check any loan originator's license at NMLS Consumer Access.
DSCR loan FAQ
What is a DSCR loan?
A DSCR loan is an investment property loan where the lender looks mainly at whether the property's rent covers its payment, instead of qualifying the loan mostly on your personal income. DSCR stands for debt service coverage ratio.
Can I get a DSCR loan in Alaska?
DSCR loans are offered by private lenders, not a government program, so availability, property types and terms depend on the lender. Ask lenders licensed for Alaska, and check any loan originator on NMLS Consumer Access.
How is DSCR calculated?
Lenders commonly use one of two methods. For one- to four-unit rentals, many divide monthly rent by the monthly principal, interest, taxes, insurance and HOA dues, called PITIA. For commercial and larger buildings, many divide yearly net operating income by yearly principal and interest.
What DSCR do lenders require?
Each lender sets its own minimum ratio and method, and the minimum can change with the down payment, credit score and property type. Ask each lender for its requirement in writing. This page does not publish lender minimums or rates.
Can I live in a property with a DSCR loan?
DSCR loans are generally for properties you will not live in. The CFPB's interpretation of Regulation Z says a property cannot be treated as non-owner-occupied if the owner expects to live there more than 14 days in the coming year. If you will live in one unit of a 2 to 4 unit property, ask a lender about owner-occupied FHA, VA, conventional or AHFC options instead, including the FHA self-sufficiency test on three- and four-unit homes.
Do DSCR lenders count Airbnb income?
Some lenders count short-term rental income and some do not, and they document it differently. Local registration and permit rules in Anchorage, Palmer, Wasilla and other areas also apply. Read our short-term rental rules guide before relying on nightly income.
Does a DSCR loan come with a Loan Estimate?
Not always. Credit for a non-owner-occupied rental is treated as business-purpose credit under Regulation Z, and business-purpose loans are generally exempt from those disclosures. Ask the lender to put the rate, fees, prepayment terms and any interest-only period in writing.
More for Alaska investors
Guides and tools that pair with this one.
Where the program details came from
Checked November 13, 2026 (America/Anchorage). Program rules change. If an official page differs from this summary, the official page controls.
- Consumer Financial Protection Bureau, Regulation Z 12 CFR 1026.3, Exempt transactions and Official interpretation, comments 3(a)-4 and 3(a)-5.
- U.S. Department of Housing and Urban Development, FHA Single Family Housing Policy Handbook 4000.1 (three- to four-unit self-sufficiency rental income eligibility).
- U.S. Department of Veterans Affairs, VA-backed purchase loan and VA Lender's Handbook (Pamphlet 26-7).
- Alaska Housing Finance Corporation, General Requirements.
- Nationwide Multistate Licensing System, NMLS Consumer Access.
- Calculator formulas: standard fixed-rate amortization, interest-only payment (loan times monthly rate) and the two DSCR definitions above. No market data is used.
KELLER WILLIAMS REALTY ALASKA GROUP
Properties of Alaska by HERO Realty Group
A team at Keller Williams Realty Alaska Group, 621 S Knik Goose Bay Rd, Wasilla, AK 99654 · Office 907-360-7448
Properties of Alaska is a real estate team, not a mortgage lender or loan originator. Information on this page is general education, not a loan offer, a commitment to lend or financial, tax or legal advice.
Each office is independently owned and operated.
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