Can first-time investors get fix and flip loans?

Yes. Many lenders offer specific programs for first-time flippers. The key factor is deal quality — your credit score, a defensible ARV, a detailed scope of work, and adequate reserves matter more than prior flip experience. Having a strong deal at a good price compensates for limited experience in most lenders' eyes.

What credit score is required for a fix and flip loan?

Most lenders require a minimum credit score of 620–640. A score of 680 or higher opens up better rates, terms, and more lender options. Some programs are available for scores in the 600–619 range with additional equity or reserves — ask your lender about first-timer options.

How is the loan amount calculated for a fix and flip loan?

Fix and flip loans are sized based on a percentage of the after-repair value (ARV) — the estimated value of the property once renovations are complete. Most lenders fund up to 65–75% of ARV. The total project cost (purchase price + rehab budget) must stay within this limit. The lender funds the purchase portion at closing; rehab funds are released in draws as work is completed.

How long does it take to close a fix and flip loan?

Fast-moving lenders can close fix and flip loans in 5–10 business days for clean deals. Most close within 2 weeks. This is significantly faster than conventional mortgages — which is why fix and flip lenders are preferred for distressed property acquisitions where motivated sellers want quick closes.

What's the difference between a fix and flip loan and a hard money loan?

They are typically the same product. 'Hard money loan' is an older industry term for short-term, asset-based real estate loans. 'Fix and flip loan' or 'bridge loan' are more commonly used terms today. Both refer to the same loan structure: short-term, interest-only, qualifying on ARV rather than personal income, with draw-based renovation funding.

Does Grafton Funding offer DSCR loans for rental properties?

Yes — DSCR (Debt Service Coverage Ratio) loans are our most popular product. We lend on single-family rentals, 2–4 unit properties, short-term rentals (like Airbnb and VRBO), and small multifamily up to 10 units. We qualify the property on its rental income rather than your personal income or tax returns. Minimum DSCR is typically 1.0x, and we lend in TX, FL, GA, NC, SC, and other states.

Does Grafton Funding do fix and flip loans or bridge loans?

Yes. We provide fix and flip loans and bridge loans for non-owner occupied investment properties. Our programs cover the purchase price plus rehab costs, with fast closings. Loan terms are short-term (typically 12–18 months) and are designed around the investor's exit strategy — either sale or refinance.

Can I get a DSCR loan for an Airbnb or short-term rental property?

Yes — we specialize in short-term rental (STR) financing. We use either the property's actual Airbnb or VRBO income history or a market-rate STR income estimate to qualify the loan. You don't need W-2s or tax returns.

Does Grafton Funding offer new construction loans for investment properties?

Yes. We offer new construction loans for non-owner occupied residential investment properties, including spec builds, ground-up construction, and lot + build projects. These are short-term loans that fund in draws as construction progresses.

Does Grafton Funding lend in North Carolina?

Yes — we actively lend in North Carolina, including the Charlotte metro, the Triangle (Raleigh/Durham/Chapel Hill), Wilmington, and Asheville. We offer DSCR rental loans, fix and flip loans, and new construction financing for NC investment properties. Local NC line: (910) 218-1286.

Can I qualify for a loan without showing tax returns or personal income?

Yes — our DSCR loans are underwritten based on the property's rental income, not your personal income or tax returns. This makes them ideal for self-employed investors and business owners. We do require a credit check and down payment, but there's no traditional income verification.

What credit score do I need to get a loan from Grafton Funding?

For most DSCR rental loan programs, we generally look for a minimum credit score in the 660–680 range, though this can vary by program and loan-to-value. Fix and flip loans may have different requirements depending on experience and deal strength.

How much do I need to put down for a DSCR loan?

For DSCR rental loans, we typically lend up to 75–80% loan-to-value (LTV), meaning you'd need 20–25% as a down payment. The exact LTV depends on the property type, DSCR ratio, and your credit profile. We lend exclusively on non-owner occupied investment real estate.

How quickly can Grafton Funding close a loan?

Many of our transactions close in 2–4 weeks depending on the loan type, property, and how quickly documentation is provided. We prioritize responsive communication and efficient underwriting for investors who need to move fast on deals.

Does Grafton Funding work with first-time real estate investors?

Yes — we work with both new and experienced investors. For DSCR rental loans, first-time investors are welcome as long as the property cash flows and the borrower meets our credit and down payment requirements. For fix and flip loans, some experience is preferred but not always required.

DSCR Loan Requirements: What You Need to Qualify in 2026

9 hours ago

4 min read

DSCR loans have made investment property financing accessible to a much wider range of real estate investors — especially self-employed investors, business owners, and anyone whose income is complex, inconsistent, or simply doesn't fit neatly into a W-2 box.

But DSCR loans aren't unqualified. They have their own set of requirements — just different ones than conventional mortgages. Understanding exactly what lenders look at — and how to position your loan to qualify — is the key to getting approved.

Quick Answer: DSCR loan requirements typically include a minimum 640–680 credit score, 20–25% down payment, and a DSCR ratio of 1.0 or higher (some programs allow 0.75). No W-2s, tax returns, or employment verification required. The property's rental income — not the borrower's income — is the primary qualification factor.

What Is a DSCR Loan?

DSCR stands for Debt Service Coverage Ratio. A DSCR loan is a type of investment property mortgage that qualifies based on the property's rental income relative to its total debt payments — rather than the borrower's personal income.

The DSCR formula: DSCR = Monthly Gross Rental Income ÷ Monthly PITIA (Principal + Interest + Taxes + Insurance + HOA)

A DSCR of 1.0 means rent exactly covers all debt payments. A DSCR above 1.0 means the property generates positive cash flow after debt payments. Most lenders require 1.0 or higher, though some programs allow below 1.0 for strong-credit borrowers.

DSCR Loan Requirements at a Glance

Requirement	Typical Range
Minimum Credit Score	640–680
Down Payment	20–25% (some programs: 15%)
Minimum DSCR Ratio	1.0 (some programs: 0.75)
Minimum Loan Amount	$100,000
Maximum Loan Amount	$3M–$5M+ (varies by lender)
Property Types	SFR, 2–4 unit, condo, townhome
Loan Terms	30-year fixed, 5/1 ARM, 7/1 ARM, IO
Employment/Income Docs	Not required
Tax Returns	Not required
LLC or Entity Vesting	Available

Credit Score Requirements

Most DSCR lenders set a minimum credit score of 640–680. However, credit score significantly affects your rate — not just your eligibility.

640–679: Eligible at most lenders; expect higher rate and stricter LTV limits
680–719: Standard eligibility; mid-tier pricing
720–759: Better rates; more program options
760+: Best available rates; maximum program flexibility

DSCR lenders typically pull all three bureaus and use the middle score of the primary borrower. For loans with two borrowers, most lenders use the lower of the two middle scores.

Down Payment Requirements

Most DSCR loan programs require 20–25% down (75–80% LTV). Some programs offer 15% down for strong-credit borrowers. The down payment directly affects your rate — more equity means lower risk and better pricing.

Important: You cannot use seller concessions or gift funds for DSCR loan down payments. The funds must be verified as your own assets, proceeds from another property sale, or business entity funds (if vesting in an LLC).

DSCR Ratio Requirements

How DSCR Is Calculated

Lenders calculate DSCR using the property's market rent — typically from an appraiser's rent schedule or a comparable rent analysis — divided by the full PITIA payment (principal + interest + taxes + insurance + HOA).

Example: A property with $2,500/month market rent and $2,200/month PITIA has a DSCR of 2,500 ÷ 2,200 = 1.136.

Minimum DSCR Requirements

Standard programs: 1.0 DSCR
Some programs: 0.75 DSCR (for 720+ credit borrowers with 25%+ down)
No Ratio DSCR: Available at select lenders for very strong profiles

Short-term rental DSCR loans use projected STR income (from AirDNA or similar tools) rather than long-term market rent. This allows vacation rental investors to qualify using Airbnb income projections.

Want to See if you Qualify for a DSCR Loan?

Want to know if your investment property qualifies for a DSCR loan? Grafton Funding provides same-day pre-qualification with no commitment.

CHECK MY ELIGIBILITY

Property Requirements

Eligible Property Types

Single-family residences (SFR)
2–4 unit residential properties
Condos (warrantable and some non-warrantable)
Townhomes
Planned unit developments (PUDs)

Ineligible Property Types

Primary residences (DSCR loans are investment property only)
Commercial properties (use commercial DSCR products)
5+ unit multifamily (use commercial/agency products)
Mobile homes and manufactured homes
Raw land

Property Condition

DSCR loans require the property to be in rentable condition. Distressed or heavily damaged properties that can't support a market rent don't qualify for DSCR — they're candidates for fix and flip bridge loans instead.

Documentation Required

One of the primary advantages of DSCR loans is simplified documentation. Here's what most programs require:

Credit report (lender pulls)
Property appraisal (lender orders)
Lease agreement or rent schedule (if already leased)
Bank statements or asset documentation (for down payment verification)
Entity documents if vesting in LLC or other entity

What you don't need: W-2s, tax returns, pay stubs, or employment verification.

Frequently Asked Questions: DSCR Loan Requirements

Can I get a DSCR loan if I'm self-employed?

Yes — DSCR loans are specifically designed to work for self-employed investors, business owners, and anyone with complex or hard-to-document income. Since qualification is based on the property's rental income, not your personal income, employment type is irrelevant.

Does the property need to be currently rented to qualify?

No. If the property is vacant, lenders use the appraiser's market rent estimate to calculate DSCR. The property just needs to be in rentable condition. Many investors use DSCR loans to purchase properties and rent them after closing.

Can I hold a DSCR loan in an LLC?

Yes. Most DSCR lenders allow — and some prefer — investors to vest the loan in an LLC or other entity. This can provide asset protection and simplify portfolio management. Verify LLC eligibility with your lender before closing.

What happens if my DSCR ratio is below 1.0?

Some lenders offer 'No Ratio' or 0.75 DSCR programs for properties that don't quite cash flow. These typically require a higher down payment (25%+), a strong credit score (720+), and may carry a rate premium. Not all lenders offer below-1.0 DSCR programs.

How many DSCR loans can I have at once?

Unlike conventional investment property loans, which Fannie Mae caps at 10, DSCR loans have no standardized limit on how many you can hold. Individual lenders may have their own concentration limits, but many investors use DSCR loans to build portfolios of 10, 20, or 50+ properties.