Investment-Property & DSCR Financing
Financing for rental properties, from conventional investor loans to debt-service-coverage-ratio (DSCR) programs.
Investment-property loans finance homes you’ll rent rather than live in. Conventional loans can finance rentals using your personal income. DSCR loans, offered by some non-QM lenders, focus mainly on whether the property’s rent covers its housing payment.
Availability, terms, and eligibility for this program vary by lender and investor. Ask Shane whether Ease Mortgage currently offers this option for your situation.
Who may qualify for investment financing
Buyers purchasing (or refinancing) a rental property they won’t live in, from first-time investors to experienced landlords.
- Conventional investment loans use your personal income, credit, and assets, plus documented rental income where allowed.
- DSCR loans (non-QM) qualify mainly on the property’s cash flow. They’re typically used for business-purpose rentals.
- Thinking about living in one unit of a 2–4 unit home? Then it’s a primary residence, and owner-occupied options like conventional, FHA, or VA may apply instead.
How down payments work
Fannie Mae’s maximum LTV for an investment property purchase is 85% for one unit and 75% for 2–4 units, which means 15% and 25% down (Eligibility Matrix). Personal gifts generally can’t be used for investment properties under Fannie Mae’s gift rules (B3-4.3-04).
DSCR programs set their own down payment requirements, which often depend on credit score, the ratio, and the loan size.
Credit and income considerations
How DSCR math works (generic example):
A ratio above 1.00 means the rent covers the payment with room to spare; below 1.00 means it doesn’t. Lenders decide how rent is measured (lease or appraiser’s market-rent estimate), the minimum ratio, and how the ratio affects terms. These numbers are illustrative only.
Lenders still review credit history, reserves, and sometimes landlord experience. Many DSCR loans are made for a business purpose, and business-purpose credit is generally exempt from Regulation Z, including the consumer ability-to-repay rule (§1026.3, CFPB ATR/QM). Read the terms carefully.
Mortgage insurance or funding fees
Investment properties aren’t eligible for FHA, VA, or USDA financing as non-owner-occupied rentals. Conventional investor loans and DSCR loans are generally priced higher than primary-residence loans to reflect the added risk.
Many DSCR loans include prepayment penalties or adjustable-rate features. Ask how any penalty is calculated and when it ends.
Key advantages
- DSCR can qualify based on the property’s income rather than tax returns.
- Conventional investor loans offer long-term fixed-rate options for 1–4 unit rentals.
- Can help investors grow a portfolio when personal debt-to-income is a constraint.
- Some DSCR programs allow closing in an LLC; ask what’s available.
Important limitations and risks
- Larger down payments and reserves, and higher rates than owner-occupied loans.
- Vacancies, repairs, and rent changes affect cash flow; the ratio is a snapshot, not a guarantee.
- Business-purpose loans may have fewer consumer protections; prepayment penalties are common.
- Michigan property taxes are typically higher on non-homestead property (see below).
- Local rental registration, inspection, and licensing requirements vary by city.
Common misconceptions
MythDSCR loans don’t look at credit.
RealityLenders still review credit, reserves, and often experience.
MythA DSCR above 1.00 means the property is profitable.
RealityThe ratio covers PITIA only. Vacancy, maintenance, management, and capital repairs aren’t included.
MythInvestment loans need the same down payment as my home.
RealityConventional investor loans generally need 15% to 25% down, more than primary-residence options.
Questions to ask before choosing
- Would a conventional investment loan or a DSCR loan cost less for this property?
- How is rent measured, and what minimum ratio is required?
- Is there a prepayment penalty? How is it calculated and when does it end?
- What reserves are required, and can I close in an LLC?
- What will property taxes be after purchase without a Principal Residence Exemption, and does the city require rental registration?
Availability, terms, and eligibility for this program vary by lender and investor. Ask Shane whether Ease Mortgage currently offers this option for your situation.
Compare Investment / DSCR with another option.
Open the comparison tool with Investment / DSCR already selected, or browse all ten guides.
Keep comparing.
Conventional Mortgages
Not government-insured. Usually follows Fannie Mae or Freddie Mac guidelines.
Read the guide →Specialized financingSelf-Employed & Bank-Statement Financing
For business owners and 1099 earners whose tax returns don’t tell the whole story.
Read the guide →Specialized financingRenovation Financing: HomeStyle & FHA 203(k)
Finance the purchase (or refinance) and the renovation in one loan.
Read the guide → All guidesMortgage Programs Center
All ten guides and the side-by-side comparison tool.
Compare programs →Investment / DSCR questions, answered.
Have a question that isn’t here? Shane is happy to walk through your options.
Ask Shane a question →What is a DSCR loan?
A non-QM investment-property loan that qualifies mainly on the property’s debt service coverage ratio: monthly rent divided by the monthly principal, interest, taxes, insurance, and HOA payment. Availability and terms vary by lender and investor.
How is DSCR calculated?
Divide the monthly rent by the monthly PITIA payment. For example, $2,400 in rent divided by a $2,000 payment equals a 1.20 ratio. Lenders decide how rent is measured and what ratio they require.
How much do I need down for an investment property?
Under Fannie Mae’s eligibility matrix, generally 15% for a one-unit investment property and 25% for 2–4 units. DSCR programs set their own requirements.
Are property taxes higher on a Michigan rental?
Usually. A rental isn’t eligible for the Principal Residence Exemption, which exempts a principal residence from up to 18 mills of local school operating tax. The taxable value also generally uncaps after a sale.
Can I use FHA or VA to buy a rental?
Not for a non-owner-occupied rental. You can use them for a 2–4 unit home if you live in one of the units as your primary residence.
Sources
- Fannie Mae Eligibility Matrix (maximum LTV by occupancy, units, and product; Aug. 5, 2026)
- Fannie Mae Selling Guide B3-4.3-04: Personal gifts
- CFPB Regulation Z §1026.3: Exempt transactions (business-purpose credit)
- CFPB: Ability-to-Repay / Qualified Mortgage (ATR/QM) rule resources
- CFPB: Loan Estimate explainer
- Michigan Treasury: Principal Residence Exemption (PRE)
- Michigan Treasury / State Tax Commission: Transfer of Ownership Guidelines (uncapping)
Important: This page is educational and general in nature. It isn’t a recommendation, a loan offer, a rate quote, a Loan Estimate, an approval, or a determination of eligibility. Program guidelines, limits, fees, and availability change and vary by lender and investor; actual eligibility, pricing, and terms require a full application and review. References to a program don’t mean Ease Mortgage currently offers it; ask Shane about current availability. Information was last reviewed November 9, 2026. Shane Thomas, Senior Loan Officer | Ease Mortgage, NMLS #444451. Ease Mortgage NMLS #2273319. Licensed in Michigan and Indiana. Equal Housing Opportunity.
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Guides explain how Investment / DSCR generally work. Your real options depend on your goals and numbers. Start your secure application, or call Shane to compare them side by side.
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