Debt Service Coverage Ratio (DSCR) loans are tailored for real estate investors and are based on the property’s cash flow, meaning the income must cover operating expenses and loan repayments. Unlike conventional loans requiring extensive personal financial details, DSCR loans focus on the property’s income-generating ability, making them ideal for borrowers with complicated finances.
Direct lenders, as opposed to brokers, fund the loans themselves, providing quicker and more reliable approvals. In this article, we compare the top five direct private lenders for DSCR loans in 2024, highlighting their loan terms and strengths to help you find the right lender for your investment needs.
What are DSCR Loans?
A Debt Service Coverage Ratio (DSCR) loan is a type of Non-QM (Non-Qualified Mortgage) loan secured by residential real estate turnkey properties strictly used for business purposes and underwritten primarily based on the property. This means that the loan is backed by the property itself, rather than the borrower’s income.
DSCR loans are ideal for investors because they eliminate the need for traditional income verification methods, making it easier to qualify based on the property’s ability to generate income. These loans are increasingly popular, accounting for nearly half of all Non-QM loans rated by S&P Global between 2018 and February 2023.
To qualify, properties typically need to meet a minimum DSCR, which can range from 0.75x to 1.25x or higher. A DSCR of 1.0x means the property generates just enough income to cover its debt obligations, while a lower DSCR, such as 0.75x, indicates that lenders are willing to accept some shortfall, making it easier for investors to secure financing even if the property’s income is slightly below its debt service. Some lenders (like Angel Oak) even go as far as offering a No-DSCR option.
The No DSCR option allows investors to qualify for a loan without needing the property to meet the standard Debt Service Coverage Ratio (DSCR) requirement, which typically measures a property’s income relative to its debt obligations. This option is ideal for properties that may not yet generate sufficient rental income or are still under development. It offers greater flexibility to borrowers, as loan approval is based on other factors, such as the borrower’s creditworthiness or asset value, rather than the property’s current cash flow.
Top 5 Direct Private Lenders (Not Brokers) for Rentals (DSCR)
Easy Street Capital
Easy Street Capital is a private real estate lender headquartered in Austin, Texas, serving real estate investors around the country. Founded in 2016 by Stephen Hagerman, Easy Street Capital is defined by an experienced team and innovative loan programs. It positions itself as an ideal financing partner for real estate investors of all experience levels and specialties.
Easy Street Rates and Terms
| Loan Amount Offered | $100k to $3.5M (Blanket Portfolio loans up to $5M |
| Interest Rate | 5.99% to 9.99% |
| Minimum DSCR | 0.75x |
| LTV | Up to 80% |
| Loan Structure | 30-Year Fixed Rate Mortgage Loans; Partial IO (10-Years) Available. |
| Non-recourse loan | No |
| In-Person Appraisal? | Required. Done by a third-party appraiser |
| Credit Check | Minimum 660 FICO. |
| Personal Guaranty | Yes |
| Refinance options | Up to 80% (Acquisitions/Rate-Term Refinances), 75% (Cash-Out Refinances) |
| DTI | Not Applicable (Tax returns or personal income not required) |
| Origination fee (points) | 1% to 3% |
| Loan fees and closing cost | 0-3% Closing Fee, $1,000 Underwriting Fee, $1,500 Pass-Through Deposit (covering third-party loan costs). |
| Prepayment penalties | “5/4/3/2/1” is typical, with flexible options ranging from “3/2/1”, “2/1”, or no penalties, based on borrower needs; longer penalties typically result in lower interest rates. |
| Lends to Foreign Nationals | No |
| Property Types | Residential, Short-Term Rental, Vacation Rental up to 10 units |
| Occupancy | Long-Term, Medium-Term, or Short-Term Rentals, Vacancy okay (on Acquisitions), no operating history required on STRs |
| States offered in | Nationwide (except Nevada, North Dakota, and South Dakota) |
Why We Chose Easy Street Capital
We chose Easy Street Capital because it ticks all the boxes. Low DSCR requirements (less than 1.0)? Check! High loan amounts (up to $5M for blanket loans)? Check! Availability in all states (save 3)? Check! Very low interest rates? Check! They are also leaders in short-term rental financing for properties used as AirBNBs, VRBOs, or vacation homes, offering flexible and ultra-competitive terms to get deals done.
HouseMax Funding
HouseMax is one of the fastest-growing hard money lenders in America, rooted in Texas but with a Wall Street attitude. With over 25 years of lending experience and more than 50 years of collective experience in real estate sales and investing, HouseMax has built a strong reputation in the industry. The company has successfully funded over 3,500 deals and flipped more than 3,000 houses. Their team brings a wealth of expertise across various facets of the real estate industry, offering a hands-on approach that emphasizes personalized service and a deep commitment to helping clients achieve their mortgage and investment goals.
HouseMax Funding Rates and Terms
| Loan Amount Offered | $75,000 to $6,000,000 |
| Interest Rate | 7.0% to 12.99% |
| Minimum DSCR | 1.00x |
| LTV | Up to 80% |
| Loan Structure | 30 Year Amortization – 7/6 ARM, 10/6 ARM and 30 Year Fixed; Interest-Only Option Available |
| Refinance options | Up to 75% (Acquisitions/Rate-Term Refinances), 75% (Cash-Out Refinances) |
| DTI | Not Required (Tax returns and employment verification also not required) |
| Credit Check | Minimum 620 FICO. |
| In-Person Appraisal? | Always required before funding |
| Non-recourse loan | No |
| Personal Guaranty | Yes |
| Prepayment penalties | No |
| Loan fees and closing cost | 2+ Points plus Underwriting & Valuation of $1,995 |
| Property Types | 1-4 unit residential properties |
| Lends to Foreign Nationals | Yes |
| States offered in | All 50 states including Alaska, Hawaii and Florida! |
Why We Chose HouseMax Funding
What sets HouseMax apart is their deep expertise and dynamic partnership approach. They are not just lenders but true partners in the real estate process, bringing expert knowledge and the latest technology to design loan programs tailored to individual needs. Their focus on efficiency, with a goal to fund loans in 10 days or less, combined with a dedication to quality customer service, makes them an ideal choice for investors and builders looking for a reliable and responsive lending partner.
Stratton Equities
Stratton Equities is a leading nationwide direct private money and NON-QM (Non-Qualified Mortgage) lender, renowned for its fast and flexible lending processes. The company boasts the largest library of private money and NON-QM mortgage programs under one roof, catering to real estate investors across the country. Founded by Michael Mikhail, who transformed his life from being homeless in a foreign country to becoming a successful entrepreneur, Stratton Equities is driven by a team of seasoned industry professionals and has become a prominent name in the private lending industry, with a track record of funding up to $1.2 billion in closed loan volume.
Stratton Equities Rates and Terms
| Loan Amount Offered | $100K – $5M |
| Interest Rate | 6.99% to 8.99% |
| Minimum DSCR | 1.00x |
| LTV | Up to 80% |
| Loan Structure | Blanket Loan Options Available; 5/1 ARM, 30-Year Fixed; Fixed rates/Adjustable; Interest-Only Option Available |
| Refinance options | Up to 75% (Cash-out refinance) |
| DTI | Not Required (Tax returns and employment verification also not required) |
| Credit Check | Requires at least 650 FICO score. |
| In-Person Appraisal? | Yes |
| Non-recourse loan | No |
| Personal Guaranty | Yes |
| Prepayment penalties | Pre-payment penalty if paid off in less than 3 years |
| Loan fees and closing cost | 0% to 4% + Processing fees typically total around $1,500 |
| Property Types | Single-Family, Condos, Townhomes, Multi-Family, Commercial, Mixed Use, Office, Retail, Industrial, Warehouse |
| Lends to Foreign Nationals | Foreign Nationals Eligible |
| States offered in | All 50 states including Alaska, Hawaii and Florida |
Why We Chose Stratton Equities
Stratton Equities stands out for its comprehensive range of loan programs and its commitment to supporting both experienced and first-time lenders. What makes Stratton Equities particularly appealing is their dedication to helping first-time lenders find their footing in the industry. With a knowledgeable and reliable team, the company offers guidance and support throughout the lending process, ensuring a smooth experience. Their recognition by Forbes and other prestigious organizations (including Top 250 Privately Held Companies in the state of New Jersey) underscores their credibility and leadership in the private mortgage lending sector.
Angel Oak
Angel Oak is an Atlanta-based private lender specializing in traditional and non-QM mortgage products, offering DSCR loans between $100,000 and $3 million. Their unique approach bases approval on the property’s cash flow, allowing investors to leverage its income potential rather than personal financial details. With generous repayment periods of up to 40 years and no personal income or job verification required, Angel Oak caters to various property types, including non-warrantable condos and short-term rentals like Airbnb and VRBOs. Their recognition as one of the Top 3 Non-QM originators in 2023 by Scotsman Guide underscores their industry leadership and reliability.
Angel Oak Rates and Terms
| Loan Amount Offered | $100k to $3M |
| Interest Rate | Starting from 9.99% (can be calculated depending on loan type, FICO, and status) |
| Minimum DSCR | DSCR 0.8 – 1.0; No DSCR options (Qualifies investors without requiring property income to meet the DSCR) are available |
| LTV | Up to 85% |
| Interest-only Payment | Available; Gift funds available — (monetary gifts from approved sources used for down payments or loan costs, not requiring repayment.) |
| Term | 30-year fixed |
| Seller concessions | Up to 6% |
| Refinance | Up to 85% on Rate/Term; 75% on cash-out |
| Prepayment Penalty | Yes. Up to 5 years. |
| Credit Check | Minimum 680 – 720 FICO. |
| Repayment Schedule | 30 YR term qualified at interest-only payment plus taxes, insurance. |
| In-Person Appraisal? | Required for purchase and refinance |
| Non-recourse loan | Available |
| Loans to Foreign Nationals | Yes (but reduces Max LTV/CLTV by 5%); Foreign nationals are ineligible for short-term rentals. |
| DTI | No personal income or employment information required |
| Prior Experience | Required |
| Amount of properties | No limit on the total number of properties |
| Primary Residence | Borrower must own primary residence |
| Property Types | Non-warrantable condos, short-term rentals, single-family rentals, Airbnb, and VRBOs |
| States Available In | 12 – Colorado, Florida, Georgia, Indiana, Louisiana, New Mexico, Ohio, Oklahoma, Pennsylvania, South Carolina, Washington, and Wisconsin. |
Why We Chose Angel Oak
We chose Angel Oak due to its robust DSCR loan offerings, which provide flexibility and extensive options for real estate investors. Despite higher credit score requirements and additional appraisal costs for large loans, their policies on cash flow-based qualification, LLC registrations, and refinancing options make them an excellent choice. Their flexible policies allow loans to be registered under an LLC’s name and place no limit on the number of properties financed under a single DSCR loan.
Among other things like the No-DSCR option and allowing Gift funds, Angel Oak also allows seller concessions of up to 6%. Seller concessions are when the seller agrees to cover a portion of the buyer’s costs, like closing fees or loan expenses, up to a set limit—in this case, up to 6% of the purchase price. This helps reduce the amount of money the buyer needs to pay upfront. In simple terms, the seller contributes money to make it easier for the buyer to close the deal.
Griffin Funding
Griffin Funding, Inc., founded in 2013, is a national direct-to-consumer mortgage company specializing in VA Home Loans for active duty military and veterans, Bank Statement Loans for the self-employed, and DSCR loans for real estate investors. Serving clients across the country, Griffin Funding leverages cutting-edge technology to provide a fully digital loan origination process, making it easier and faster for borrowers to secure financing.
Griffin Funding Rates and Terms
| Loan Amount Offered | $100k to $5M |
| Interest Rate | 5.0% to 11% |
| Minimum DSCR | 0.75x |
| Loan Term | 30-year loan terms, fixed or adjustable |
| LTV | Up to 80% |
| In-Person Appraisal? | Required; Fee varies based on location and property |
| Points | 0% – 4.5% |
| Repayment Schedule | Interest-only and Amortized available |
| Refinance Options | Up to 80% LTV on a rate/term; 75% on a cash-out |
| Credit Check | Minimum 580 FICO |
| Prepayment Penalty | Yes, if paid off in 5 years. |
| Origination fee | 1% to 3% |
| Personal Guaranty | Required |
| Minimum Down Payment | 20% |
| Prior Experience | Not needed |
| Loan Fees and Closing Cost | $1,990 for processing and underwriting. Rest is variable. |
| Non-recourse Loan | Yes |
| DTI | No income or job history verification required |
| Lends to Foreign Nationals | Yes |
| States offered in | 31 states |
| Amount of Properties | No limit on the number of properties |
| Occupancy | Both long-term and short-term rentals are eligible (Airbnb, VRBO, etc.) |
Why We Chose Griffin Funding
We chose Griffin Funding for its impressive DSCR loan offerings, which include a nationwide reach, high loan-to-purchase ratios, and competitive interest rates between 3.0% and 7.5%. They stand out by allowing jumbo DSCR loans up to $5 million and accepting DSCR ratios as low as 0.75 for high-credit borrowers. With no income or employment verification required, low credit score accommodations, and no prepayment penalties, Griffin Funding provides flexible and accessible financing options for real estate investors looking to scale their portfolios.
Comparison Table
| Terms | Easy Street | HouseMax | Stratton | Angel Oak | Griffin |
| Loan Amount ($) | 100k – 3.5M | 75k – 6M | 100k – 5M | 100k – 3M | 100k – 5M |
| Interest Rate (%) | 5.99 – 9.99 | 7 – 12.99 | 6.99 to 8.99 | Starting from 9.99% | 3.0 – 7.5 |
| Minimum DSCR | 0.75x | 1.00x | 1.00 | 0 | 0.75x |
| LTV (%) | Up to 80% | Up to 80% | Up to 80% | 85% | 80% |
| Min Credit Score | 660 | 620 | 650 | 660 | 580 |
| Origination Fee | 1% to 3% | 2% | 0% to 4% | 1% to 2% | 1% to 3% |
| Prepayment Penalty | “5/4/3/2/1” typical | No | Yes, in 3 years | Yes. Up to 5 years. | Yes, if paid off in 5 years. |
| Loans to Foreign Nationals | No | Yes | Yes | Yes | No |
| States offered in | 47 states | 43 states | All 50 states | 12 states | 27 states |
Ranking the Best Dscr Hard Money Lenders
1. Griffin Funding (8.2)
2. Easy Street Capital (7.9)
3. HouseMax Funding (7.4)
4. Stratton Equities (7.1)
5. Angel Oak (7.0)
Griffin Funding dominates with the lowest interest rates and a strong mix of flexibility and affordability. Easy Street Capital excels in overall balance, particularly with competitive rates and blanket loan availability. HouseMax Funding has pretty decent but excels with their no-prepayment penalty feature. Stratto Equities offer a bit of everything with low interest rates, blanket loans, and interest-only options. Angel Oak, while flexible, loses out due to high costs and restrictive penalties, but they also register a respective 7.0 due to their No-DSCR option.
Methodology for DSCR Loans
We graded these hard money lenders based on features that have a meaningful impact on borrowers seeking DSCR loans, including interest rates, soft fees, minimum DSCR requirements, loan structure flexibility, and prepayment penalties.
Our scoring method is broken down as follows:
- Interest rate: 30%
- Soft fees: 20%
- Minimum DSCR requirements: 20%
- Loan structure flexibility: 15%
- Prepayment penalties: 15%
We chose to focus on these core elements to emphasize lenders that provide accessible financing, favorable terms, and options for real estate investors seeking long-term, cash-flow-based loans. This scoring system prioritizes affordability, flexibility, and borrower inclusivity, ensuring that investors can find tailored solutions for their rental property portfolios.
Wrap Up
DSCR loans present a highly advantageous financing option for real estate investors due to their focus on property cash flow rather than personal income verification. By evaluating the income generated by the property itself, these loans provide a more accessible route for investors with complex financial situations or those seeking to scale their investment portfolios without the cumbersome documentation required by traditional loans. The lenders we’ve highlighted offer diverse and flexible terms tailored to meet the needs of investors at various stages of their journey.
