If you're a landlord or considering purchasing a rental income property, consider a debt service coverage ratio (DSCR) loan to fund your next purchase. A DSCR loan is specifically designed to finance rental properties and can be easier to qualify for than a conventional mortgage, as it leverages the property's cash flow instead of a buyer's income, tax returns, and W-2. This article will cover the finer points of DSCR loans, including their requirements, qualification process, and flexibility for real estate investors.   What is a DSCR Loan? DSCR loans are mortgages secured by the property's rental income and do not require the buyer to provide the same documentation needed with a mortgage for owner-occupied properties. This feature is especially helpful for self-employed investors who may not have a conventional income stream or have been challenged to obtain financing through traditional banks. DSCR loans are specifically designed for residential income-producing properties and are quickly becoming the preferred option for investors purchasing income properties. Still, there are some considerations regarding DSCR loans: Only properties with one to four units are eligible for DSCR lending, as additional units in the building would classify it as "multi-family." Most DSCR lenders prefer turnkey or stabilized properties, though some allow light rehab if the property is leased or stabilized quickly. Lastly, the property must be a business asset or income investment, meaning the owner cannot reside at the address.   How DSCR Loans Are Calculated DSCR loans are based on a calculation that assesses the property's potential to cover its expenses. The calculation divides the property's net operating income (NOI) by its total debt service (TDS) to obtain a number less than, greater than, or equal to 1.0.   DSCR = Net Operating Income (NOI) / Total Debt Service (TDS)   Net operating income is calculated by subtracting the total operating expenses from the gross rental income. Total debt service refers to the sum of all debt-related costs that the property is required to pay. The DSCR ratio is what tells the borrower and lender how much income the property is generating to cover (or not cover) its own expenses. DSCR > 1 means the property is generating enough income to cover its debt. DSCR = 1 means the property is just breaking even with enough income to cover its debt. DSCR < 1 means the property isn't generating enough income to cover its debt, posing a greater risk for lenders.   For Example: DSCR = $150,000 / $100,000 = 1.5   This means the property generates $150,000 in income, with total expenses equal to $100,000. This results in a DSCR of 1.5, so the property yields 50% more income than what's needed to cover its debt, making it a more acceptable threshold for a lender to consider financing.   DSCR Loan Requirements: What Lenders Look For + Refinance Outlook Recently, rates have eased into the mid-6% to 7% range on average, and liquidity from non-agency or non-QM channels has improved. At the same time, rents are increasing unevenly by metro area, and insurance costs remain elevated in some counties. Key factors driving uneven rent increases can include: Supply and demand. Migration patterns. Construction costs. Location desirability. Inflation. Post-pandemic changes. All of this is reflected in today's DSCR underwriting. Lenders are pricing more competitively than in previous years, but they're also scrutinizing expenses such as taxes and homeowners' insurance that impact cash flow. Core DSCR requirements (what you'll typically need) and LendingOne's impact: Property & use: 1-4 unit single-family rentals (SFRs), townhomes, condos, and planned unit developments (PUDs); investment use only (non-owner-occupied). DSCR threshold: Many programs target a DSCR of ≥1.10-1.20, depending on the credit; some offer options for break-even or even sub-1.0 DSCR with compensating factors. Example: LendingOne's core grid lists 1.10-1.20 minimums by FICO; separate programs advertise flexibility for break-even and negative cash-flowing properties. Always confirm program-specific guidelines. Leverage: This is program-dependent, but LendingOne, for example, offers up to 80% LTV on purchase or rate/term refi; up to 75% LTV on cash-out. Credit & experience: Program minimums vary; one representative grid shows a minimum FICO score of 680, with stronger credit resulting in a lower required DSCR and potentially reduced reserve needs. Some programs require experience with existing investment properties. Reserves & payment structure: Expect reserves (e.g., ~9 months PITIA), with portions sometimes collected at closing and potential waivers for higher FICOs. Prepayment options often include 1-5-year step-downs, which is vital if you plan to refinance. Appraisal & rents: Full appraisal with 1007 rent schedule; lenders qualify using the lesser of actual or market rent (caps may apply). Insurance & escrows: Escrows for taxes and insurance are standard. Hazard insurance (and flood, if applicable) is required; many lenders also require rent-loss coverage (e.g., six months). Rising premiums, especially in high-risk counties, can tighten DSCR, so get quotes early.   DSCR Loan vs. Other Investment Property Loans Choosing the right loan comes down to how the deal cash flows, how quickly you need to close, and how much documentation you are willing to provide. Of course, this is easier said than done, and verifying many variables can get overwhelming. This is how DSCR loans compare with other standard options. This table focuses on general patterns across lenders. Terms vary by program and market.   Loan type Qualifying focus Docs & credit Typical LTV & term Rate & fees (relative) Best fit DSCR Rental loan Property income (DSCR) is more than the borrower’s DTI Appraisal + rent schedule; credit & reserves reviewed ~75–80% LTV; 30-year fixed or ARM; IO options Higher than conventional; lower than most short-term loans Long-term holds when you prefer property-based underwriting Conventional (agency) investment mortgage Personal income & DTI Full income and asset docs; strong credit needed LTV caps vary by units and purpose; 15–30-year terms Lowest if you fully qualify Lower-cost debt for well-documented borrowers Bridge loan Asset + exit plan (sale or refinance) Appraisal and BPO; business plan; experience and liquidity Short term (~6–18 months); leverage varies Higher rates and points Fast acquisitions or seasoning before permanent debt Fix and Flip (rehab) loan After-repair value (ARV) and scope Budget, draws, inspections; experience helps Short term (~12 months); leverage tied to LTC or ARV Higher (construction risk priced in) Buy-rehab-sell or refi to DSCR after stabilization Portfolio or blanket rental loan Portfolio cash flow (global DSCR) Rent rolls, consolidated financials, entity structure Often up to ~75% LTV; 5–10-year terms (balloon or fixed and ARM) Middle of the pack Operators consolidating multiple rentals under one loan Disclaimer: This information is provided for educational purposes. Always check the current guidelines, fees, prepayment terms, and local insurance and tax impacts before bidding or refinancing.   Should You Use a Direct Lender, Broker, or Bank for Your DSCR Loan? When financing a rental, the company you work with can significantly impact the speed, pricing, and amount of paperwork required. This is how the three options differ and when each is most suitable.   What Is a Direct Lender? A direct lender is the company that funds the loan itself. In plain terms: The lender makes the loan; a broker does not. Brokers act as intermediaries who help you shop with multiple lenders. How does this play out with DSCR loans? Direct lenders primarily underwrite based on the property's debt service coverage ratio, order the appraisal and rent schedule, and issue terms directly. Banks can also be direct lenders, but many DSCR programs are offered by non-bank lenders that specialize in investment properties. Banks engage in mortgage banking — originating, holding, or selling loans.   Example of a Direct Lender: LendingOne LendingOne is a direct private lender focused on real estate investors, offering DSCR rental loans among other investor products. It lends on non-owner-occupied 1-4 unit properties and provides an online application and borrower portal. For specifics on programs, see DSCR Rental Loans.   Comparing Direct Lenders, Brokers, and Banks Approval speed Direct lender: Often faster because underwriting, disclosures, and conditions stay in one shop. Broker: Timeline varies; brokers coordinate with a wholesale lender's underwriting. Bank: Processing may be slower due to more thorough documentation and portfolio or committee reviews. Loan Variety Direct lender: Deep menu of investor-focused products (DSCR, bridge, flip) within its own credit box. Broker: Broad market access; can shop multiple wholesale lenders for niche scenarios. Bank: Strong for conventional or agency and portfolio products; may have fewer DSCR options. Rates and fees Direct lender: Competitive for its programs; pricing set in-house. Broker: Can help you compare offers; broker compensation and fees may apply in addition to lender fees. Bank: Often sharp pricing if you qualify under bank or agency rules. Documentation Direct lender: DSCR loans emphasize property income (from leases and market rent) plus credit, reserves, and entity documents. Broker: Documentation depends on the target lender's program. Bank: Heavier personal income and DTI documentation for many programs. How to Decide Choose a direct lender if you want a streamlined DSCR process and clear, program-specific guidance from the funding source. Choose a broker if you want help shopping for multiple DSCR and investor programs with a single intake. Choose a bank if you easily qualify for conventional or portfolio terms and want potential relationship pricing or servicing under one roof.   Financing Options for DSCR Loans Within DSCR financing, loan structure directly impacts payment stability, cash flow, and when it makes sense to refinance. Here's what investors should keep in mind: Fixed-rate (usually 30-year): Stable payment for the full term; good for long holds and budgeting. Often starts a bit higher than ARMs; you'd refinance to benefit from future rate drops. Adjustable-rate (5/6, 7/6, 10/6 ARMs): Offers a lower start rate, which is fixed for an initial period; then adjusts with caps. Works when you plan to sell or refinance in 3-10 years or expect rates to ease. Interest-only (IO) periods: Interest only for 5-10 years, then amortizing. Improves near-term cash flow and DSCR; no principal paid during IO; payment jumps when amortization begins. Some lenders size DSCR to the post-IO payment. Term & amortization: 30-year standard; some offer 40-year with an IO period. Confirm which payment (IO vs. post-IO) is used to qualify. Down payment/LTV: Purchases typically have a 75-80% LTV (approximately 20-25% down). Cash-out refinancing often caps lower. Results vary by DSCR, credit, reserves, property, and market. Prepayment: Step-downs are common (e.g., 3-2-1 or 5-4-3-2-1). Match the penalty window to your hold period. Recourse, entity, assumability: Most close to an LLC with personal guarantees; non-recourse exists at tighter terms. Assumability is lender-specific and not always offered. Short-term rentals: Many programs allow STRs but may underwrite to market rent or an average history. Model higher expenses (management, cleaning, vacancy) in DSCR.   DSCR Loan Pros and Cons DSCR Pros Easier qualification for many investors: Underwrites to the property's cash flow rather than your personal income, tax returns, or W-2s — helpful for self-employed borrowers or those with complex finances. Faster path to scale: Because income docs are lighter, approvals can be quicker than traditional bank mortgages (still subject to appraisal and underwriting). Entity-friendly: Allows LLC or partnership ownership, making it straightforward to buy with partners and separate business from personal assets. Investment-focused: Explicitly designed for non-owner-occupied properties, aligning the loan with portfolio goals. DSCR Cons Higher cash to close: Down payments are often larger than conventional mortgages (and cash-out limits may be tighter). Pricing and fees: Expect higher interest rates, closing costs, and lender fees versus many bank and agency loans due to the risk profile and reduced personal income verification. Prepayment penalties: Many programs include a step-down prepayment, which can limit the flexibility of early sale or refinance. Not government-backed: Fewer protections than agency loans; terms vary by lender, and guidelines can change. Cash-flow risk: If rents soften or expenses rise, such as taxes, insurance, or HOA fees, the DSCR can fall below 1.0, increasing the risk of financial stress or foreclosure. Market fit matters: Not ideal for properties with unstable income or in volatile markets where vacancy or rent swings are common.   Is a DSCR Loan Right for You? DSCR loans offer incredible flexibility and are fast becoming the preferred loan vehicle for residential real estate investors today. Working with a lender well-versed in DSCR financing will give you the expertise and options you need to achieve your investment goals. Ultimately, DSCR loans may be a better option for self-employed investors, investment partnerships, or in scenarios where the property's income potential comfortably exceeds its expenses. However, a conventional mortgage may be a more suitable and affordable choice for first-time buyers or anyone who plans to live in the property. For more information, explore the loans available for your next real estate investment. CTA button: Speak with a LendingOne Loan Advisor  

During the Pandemic Housing Boom, flipping surged as skyrocketing price appreciation drew investors in. The 2022 interest rate shock ended that frenzy, forcing many newcomers out and leaving more seasoned operators to adapt to tighter margins. ​​In early 2025, our first-ever LendingOne–ResiClub Fix and Flip Survey showed a market still digesting the fallout from the 2022 rate shock. Activity had cooled from the pandemic, but many flippers said they still planned to do deals in 2025. In today’s article, we’ll share the full results from the LendingOne-ResiClub Fix and Flip Survey for Q3 2025. The flipper survey was fielded from August 20 to September 15, 2025. The results reveal many of the same themes as our Q1 2025 survey—but the story has evolved. "Our latest survey reveals a fix-and-flip market that is both resilient and realistic," says LendingOne CEO Matthew Neisser. "The broader macroeconomic environment, with elevated interest rates, higher inflation, and rising costs for materials and labor, has clearly ended the pandemic frenzy. However, the lack of housing inventory and the ongoing demand for updated homes have created a new landscape for experienced investors. They are continuing to find opportunities, particularly in the Midwest and Northeast, even as they face increased pressures. Meanwhile, flippers in the Southwest and Southeast, while seeing more market softness, remain optimistic about a market rebound. This strategic mindset, combined with a widespread plan to hold a portion of their flips as rental properties, highlights the adaptability of today’s professional flipper in a more challenging, yet opportunity-rich, environment." Total Number of U.S. Home Flips by Quarter Topline Findings  1. Home Flipper Sentiment and Intent  Shifts from Q1 2025:  Market sentiment is split but steady compared to Q1: 56% of U.S. home flippers describe their primary market as somewhat strong (44%) or very strong (12%). Expectations for demand have softened: 28% of flippers now anticipate weaker demand over the next year, up from 21% in Q1 2025. Fix and Flip Activity: A strong majority of flippers (88%) still plan to complete at least one project in the next 12 months. Nearly two-thirds (64%) of flippers plan to convert at least one project into a rental property. Market Outlook: 64% of survey participants expect the fix and flip market to stay the same (42%) or weaken (22%) in 2025.  Optimism runs the highest in the South: 41% of flippers in the Southwest and 42% in the Southeast expect their market to strengthen over the next 12 months—the highest among all regions. 2. Financial Considerations Renovation Costs:  Budgets vary widely, but Northeast flippers tend to spend the most, with half (50%) investing more than $100,000 per project. 56% of respondents say kitchen upgrades deliver the best ROI. 41% of U.S. home flippers report a typical margin of 20–29%. 3. The biggest concerns across U.S. markets, according to home flippers  Organization and timeline stress: Working with contractors continues to be one of the most challenging aspectsparts of fix and flip projects (28%), followed by staying on timeline (23%), obtaining financing (21%), and budget management (17%). Two-thirds (66%) of flippers say their projects typically take 4–6 months from purchase to resale. In the Northeast, however—where regulation is heavier—12% report project timelines of 10 months or longer. Regional variation and pain points: Nationally, competition for properties (28%) and interest rates (27%) are cited as the biggest current challenges. In the Northeast and Midwest, competition is even more acute, with 39% and 37% respectively naming it their top concern. The Midwest is viewed as the strongest region, with 23% of flippers calling their market very strong and 50% calling it somewhat strong. The Southwest is seen as the weakest region, with 17% describing their market as very weak and 43% as somewhat weak. How likely home flippers are to conduct a flip in the next 12 months. Q1 vs Q3 comparison. How flippers describe the current state of their primary fix and flip market. Q1 vs Q3 comparison. How flippers describe demand for fix and flip properties in their market over the next year. Q1 vs Q3 comparison. How many projects flippers plan to convert to rentals using the BRRRR method How flippers see the market evolving over the next 12 months How flippers describe demand for fix and flip properties in their market over the next 12 months Average budget flippers report for a renovation project Profit margins flippers report on completed projects Renovations that provide the best ROI Biggest challenges flippers face with fix and flip projects Timeline of flips from purchase to resale How flippers describe the current state of their primary market Biggest challenges flippers face in their current market

Price reductions on home listings have returned to a level not seen in nearly three years, with 21% of U.S. active listings this summer seeing a cut—up more than five percentage points from July 2024. For investors—particularly in the single-family rental space—this environment can mean stronger negotiating power and a greater chance to acquire properties at a discount. That’s why LendingOne analyzed Realtor.com’s metro-level inventory data to find where price cuts are most common and where they’re rising fastest.  Topline Findings National price cut rate reached 21% in July 2025, matching the post-pandemic high from September 2022 Price cut activity is highest in Sun Belt metros, where home prices skyrocketed during the Pandemic Housing Boom Price cuts are becoming more common in most of the largest U.S. metros, with 42 of 50 seeing more active listing prices cut than one year ago Price reductions are back at post-pandemic highs The rising share of homes with a price cut reinforces the shift toward a more buyer-friendly market that began after mortgage rates surged and the Pandemic Housing Boom ended.  Share of U.S. Home Listings with Price Reductions A single price cut doesn’t necessarily mean home values are dropping; some sellers simply overshoot the market or the true value of their property. The real signal comes from the trend. So when the share of listings with cuts rises beyond normal seasonal patterns, it suggests the market is cooling and buyers have gained leverage. Right now, that’s exactly what’s happening. Elevated mortgage rates and swelling inventory in certain metros are forcing more sellers to adjust their asking prices.  Here’s the share of U.S. home listings seeing a price reduction, by July:  July 2017 → 19.24% July 2018 → 20.59% July 2019 → 17.70% July 2020 → 11.11% July 2021 → 9.77% July 2022 → 19.13% July 2023 → 15.50% July 2024 → 19.52% July 2025 → 20.58% The U.S. metros with the deepest price cut activity Some markets are seeing price cut shares far above the national average—often those that experienced rapid pandemic-era price growth and are now adjusting to affordability limits. Share of U.S. home listings with price reductions Among the largest 100 U.S. metros, these are the 10 that saw the largest price reduced share of listings in July 2025: Denver-Aurora-Centennial, CO → 32.9% Colorado Springs, CO → 32.2% Portland-Vancouver-Hillsboro, OR-WA → 31.3% Austin-Round Rock-San Marcos, TX → 31.2% Dallas-Fort Worth-Arlington, TX → 31.2% Phoenix-Mesa-Chandler, AZ → 30.9% Salt Lake City-Murray, UT → 29.7% Indianapolis-Carmel-Greenwood, IN → 29.5% Jacksonville, FL → 29.1% Tampa-St. Petersburg-Clearwater, FL → 28.9% In Mountain West metros like Denver and Colorado Springs, years of rapid price appreciation have left affordability stretched, and elevated mortgage rates are now forcing more sellers to drop prices. West Coast markets like Portland are dealing with slower in-migration and persistent affordability challenges,  Meanwhile, Sun Belt metros, on top of dealing with the Pandemic Housing Boom price shocks, are facing intense competition from a surge in both new construction and resale listings. For investors, these areas can offer higher negotiating leverage now—especially if rental demand remains strong despite softer sales activity. Where price cuts are ramping up While metros like Denver and Austin have among the largest shares of listings being cut, the Sun Belt isn’t catching a break. Many metros here are seeing the fastest gains in price cut activity as a flood of new supply collides with softer demand, forcing sellers to get aggressive.  Mountain West markets are also posting some of the biggest jumps, even after starting with already-high price cut rates. Affordability pressures remain intense, and the seasonal bump in inventory is only adding to seller urgency—conditions that can open the door for well-timed acquisitions. Even in the Midwest, markets like Columbus are seeing momentum build as inventory piles up after a strong post-pandemic run. For investors, that could mean more negotiating leverage and a wider selection of deals as head into the next year. The share of home listings with price cuts is rising in 42 of the 50 largest metro areas Big Picture Price cuts are back at post-pandemic highs, led by Sun Belt and Mountain West metros where high rates and swelling inventory are forcing sellers’ hands. For investors, that could mean an opportunity to lock in a great deal on their next rental.