I’m Travis Buis, a loan officer with Elite Home Lending in Myrtle Beach. As a DSCR lender in South Carolina, I use this loan a lot on the Grand Strand, because this is a rental market. Many of the buyers here already own the home they live in somewhere else.

DSCR stands for debt service coverage ratio. In plain terms, the property qualifies on its own rent. Your personal income and tax returns mostly stay out of it.

What is a DSCR loan?

It’s a loan for investment property only. Instead of asking whether your paycheck covers the mortgage, the lender asks whether the rent does.

That’s why investors like it. Self-employed buyers, people with several rentals and anyone whose tax returns show heavy write-offs often look weaker on a standard application than they really are. A DSCR loan sidesteps that problem.

How is the DSCR calculated?

The rent has to carry the property. Lenders divide the monthly rent by the monthly housing cost, which includes principal, interest, taxes, insurance and any HOA dues. That result is the ratio.

• At 1.00, the rent covers the cost exactly. That’s break-even.
• Around 1.25 is a common floor. The rent covers the cost with a quarter to spare.
• Below 1.00, the property doesn’t pay for itself on paper. Some programs still lend, but the terms tighten.

On this coast, insurance moves that ratio more than people expect. Wind, hail and flood premiums sit on the cost side of the math, so a quote can change the answer.

Who qualifies for a DSCR loan?

The property does most of the qualifying, but you still matter.

Your credit

Stronger credit gets better pricing. Weaker credit can still work, but expect a higher rate or a bigger down payment.

Your down payment and reserves

Expect to put down more than an owner-occupied loan asks for. Lenders also want reserves, meaning cash left over after closing to cover the payment for a stretch if the unit sits empty.

Your documents

Less paperwork than a standard loan, but not none. Plan on bank statements for the down payment and reserves, the lease or a rent estimate, and an appraisal. The appraiser often completes a rent schedule, called Form 1007, that estimates market rent.

Which properties work with a DSCR loan?

Most rentals do. That includes single-family homes, small multifamily buildings, townhomes and many condos.

Condos need a closer look here. Buildings that run like hotels, with a front desk and a rental pool, are called condotels. Most DSCR programs either price them differently or turn them down, and plenty of oceanfront inventory falls into that group.

How does a DSCR loan work on a Grand Strand rental?

Does short-term rental income count here?

It depends on the program, and it’s the question I hear most. Some programs accept documented short-term rental history. Others only use long-term market rent from that Form 1007.

That gap can change the whole deal. A beach condo that books solid in July may sit quiet in February, so ask before you count on the summer numbers. I walk through it in DSCR loans on a Grand Strand rental.

What about local rental rules?

Short-term rental rules are set locally, and they change. Check with your attorney or CPA about what’s allowed at a specific address before you plan around nightly income.

Is it a rental or a second home?

Decide that first, because they’re different loans. If you’ll use the place yourself, read second home versus investment property before we talk.

Ready to run the ratio on a real address? Get pre-qualified and send me the property. I’ll tell you where it lands.

DSCR loan FAQ

What is a good DSCR for a rental property?

A ratio of 1.00 means the rent exactly covers the housing cost. Many programs look for around 1.25 or higher, and a higher ratio usually means better terms.

Can anyone get a DSCR loan?

It’s only for investment property, not a home you’ll live in. Beyond that, the rent does most of the qualifying, along with your credit, down payment and reserves.

Do DSCR loans need a bigger down payment?

Usually, yes. Expect to put down more than an owner-occupied loan asks for. The exact amount depends on the program, the property and the ratio.

Can I use a DSCR loan on a Myrtle Beach condo?

Often, but the building matters. Condos that operate like hotels are harder to finance, so I check the project before you make an offer.