Question 1

What is a DSCR loan?

Accepted Answer

A DSCR loan (Debt Service Coverage Ratio loan) qualifies borrowers based on a property's rental income rather than personal income or tax returns. Lenders divide the monthly gross rental income by the monthly PITIA to determine eligibility.

Question 2

What DSCR do I need to qualify?

Accepted Answer

Cressida Direct prices residential DSCR loans in tiers rather than at a single cutoff. The Standard Tier starts at a 1.10 DSCR, where the property's rent is at least 110% of the payment. The Aggressive Tier reaches down to a 1.0 DSCR floor — the rent exactly covers the payment — for borrowers who offset the thinner coverage with lower leverage, stronger credit, or reserves. A separate no-ratio option is available up to 70% LTV with no minimum DSCR.

Question 3

How is DSCR calculated?

Accepted Answer

DSCR is calculated by dividing the monthly gross rental income by the monthly PITIA (Principal, Interest, Taxes, Insurance, and HOA dues). A DSCR of 1.25 means the property generates 25% more income than needed to cover the loan payment.

Question 4

Do DSCR loans require tax returns?

Accepted Answer

No. DSCR loans do not require personal tax returns, W-2s, or income verification. Qualification is based solely on the property's rental income and the loan's debt service.

Question 5

What property types qualify for DSCR loans at Cressida Direct?

Accepted Answer

Eligible properties include non-owner occupied single-family residences, condominiums, townhomes, and 2–4 unit apartment buildings. Foreign nationals, U.S. citizens, and legal entities are all eligible.

Question 6

How does Cressida Direct underwrite owner-occupied commercial loans?

Accepted Answer

Cressida Direct underwrites owner-occupied commercial loans using an SBA-style global cash flow method. Qualifying income is calculated as 2025 net operating income plus SBA-recognized addbacks: owner compensation, rent on the subject property, depreciation, and amortization. A minimum coverage ratio of 1.20x is required. A light doc alternative using 12 months of business bank statements is available for borrowers who prefer not to provide tax returns.

Question 7

What is the minimum coverage ratio for an owner-occupied commercial loan?

Accepted Answer

Cressida Direct requires a minimum debt service coverage ratio of 1.20x for owner-occupied commercial loans underwritten under the SBA global cash flow method. This means the business must generate at least 20% more adjusted net income than the annual loan payment. Compensating factors may apply for ratios between 1.00x and 1.20x at advisor discretion.

DSCR Property Analyzer

Frequently Asked Questions