DSCR Credit Requirements
DSCR Credit Requirements
The minimum credit score requirements to qualify for a DSCR loan vary significantly depending on the specific program, the loan amount, the Loan-to-Value (LTV) ratio, and the property’s Debt Service Coverage Ratio (DSCR) threshold.
Here is a detailed breakdown of the DSCR Credit Requirements for DSCR loans.
General Minimum FICO Requirements
DSCR loans, being a segment of Non-Qualified Mortgages (Non-QM), often have tiered credit requirements. The overall average credit score for non-QM borrowers in 2024 was 776.
Across various DSCR loan programs, the minimum representative FICO score for all borrowers is generally 620, although some programs set a higher floor for eligibility:
- Our Horizon DSCR: The minimum credit score required is 660.
- Our Sharp DSCR: The minimum FICO score required is 660.
- Our Edge Investor Classic DSCR: The minimum FICO score required is 620.
- Easy Street Capital: The minimum credit score is 640 for DSCR Loans.
- Our Prime Non-QM Series: The lowest FICO score listed in the DSCR matrix is 640.
Tiered FICO Requirements Based on DSCR and LTV
We use matrices to set minimum FICO scores based on the financial strength of the deal. Deals with lower DSCRs (negative cash flow) or higher LTVs (less equity/down payment) generally require higher FICO scores to compensate for the increased risk.
A. DSCR : 1.00 (Positive or Break-Even Cash Flow)
For properties generating sufficient or break-even rental income, the minimum required FICO score varies by loan amount and leverage:
Program / Loan Amount | Max LTV | Min FICO Required |
Our Edge Investor Classic (<=$1M) | 80% | 640 |
Our Edge Investor Classic (<=$1M) | 75% | 620 |
Our Advantage DSCR (<=$1M) | 80% | 700 |
Our Horizon DSCR (<=$1M) | 85% | 740 |
Our Horizon DSCR (<=$1.5M) | 65% | 660 |
River DSCR (<=$1.5M) | 80% | 700 |
Our Prime Non-QM Series (<=$2M) | 80% | 680+ |
B. DSCR < 1.00 (Negative Cash Flow)
For loans where the property generates less income than the monthly debt (DSCR < 1.0, but typically >0.75), the FICO requirements are generally higher:
Program / Loan Amount | DSCR Range | Max LTV | Min FICO Required |
Our Edge Investor Classic (<=$2M) | 0.75 – 0.99 | 75% | 720 |
Our Edge Investor Classic (<=$1.5M) | 0.75 – 0.99 | 70% | 680 |
Our Advantage DSCR (<=$1M) | 0.80 – 0.99 | 70% | 680 |
Our Prime Non-QM Series (<=$1M) | < 1.00 | 65% | 660 |
River DSCR (<=$2M) | 0.75 – 0.99 | 75% | 700 |
FICO Requirements for Specific Scenarios
- First-Time Investor: A borrower who has not owned an investment property for 12 months in the last 3 years is considered a First-Time Investor. First-Time Investors require a minimum FICO of 700 under the our Sharp DSCR program (DSCR >1.0 required), and a minimum 700 FICO under the Edge Investor Elite program.
- DSCR No Ratio Loans: These loans, which specifically target properties with a DSCR of 0 to <0.75, often have higher FICO requirements. The our Horizon DSCR No Ratio program requires a minimum credit score of 700.
- Foreign Nationals: For Foreign Nationals qualifying under the DSCR program, if they have a U.S. credit score, they must use that score for eligibility purposes. If they qualify without a usable U.S. credit score, they may be underwritten based on a 660 representative score (Foreign National DSCR).
- Short-Term Rentals (STRs): STR refinances under the our Edge Series require a minimum score of 700. STR purchases under our Connect require a minimum score of 700.
In summary, while the lowest possible score you might find is 620, most competitive DSCR programs for typical loan amounts require a minimum FICO of 660 to 700. If the deal involves higher leverage, negative cash flow, or a specialized scenario (like No Ratio or First-Time Investors), the minimum FICO score generally climbs to 700 or higher.
FAQ's
No, accounts where the borrower is only an authorized user are typically not considered an acceptable tradeline for satisfying the minimum tradeline requirement for DSCR loans.
No, unlike many other loan types, DSCR loans are often exempt from the requirement to provide a letter of explanation (LOE) for credit inquiries appearing on the credit report.
The strictest housing history requirement (0x30x12) is typically required for loans categorized as “DSCR No Ratio”.
Generally, multiple bankruptcies are ineligible for DSCR programs, regardless of the seasoning period.
If the DSCR is less than 1.0, the LTV and CLTV limits are typically reduced, and the borrower may need a higher minimum FICO score or be subject to higher reserve requirements. For example, a DSCR below 1.0 might limit the LTV for cash-out refinances to 60% or 65%.
All borrowers on DSCR transactions must generally meet minimum tradeline requirements. This typically means having either:
• Three tradelines reporting for 12 or more months (with at least one active in the last 12 months), OR
• Two tradelines (one reporting for 24+ months, and the other for 12+ months).
A satisfactory 12-month housing history is required for the primary residence and the subject property (if a refinance). Many programs permit a maximum of one 30-day late payment in the last 12 months (1x30x12).
The general waiting period after a major credit event (like foreclosure, short sale, or bankruptcy) for many DSCR programs is 3 years (or 36 months).
For DSCR programs, the lender typically uses the lowest representative score of all borrowers on the file to qualify the loan.
The minimum required representative credit score generally starts around 620. However, depending on the specific product, lender, and Loan-to-Value (LTV) ratio, minimum scores may be higher, such as 640 or 660.
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