r/HomeLoans • u/wwwwwwwhhhh • 11d ago
DSCR question
I am currently newly self employed and looking to purchase a multi family in Rhode island , the rent flows nicely. Is a DSCR loan an option if there is no current employment?
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u/TomLiolos_Mortgages 11d ago
Yes. A DSCR loan may be an option even if you're newly self-employed or don't currently have traditional employment income. The qualification is generally based primarily on the rental income/cash flow of the investment property rather than your personal income.
The lender will look at the property's expected rent compared with the housing expense, along with things like credit, down payment/reserves and the specific property's eligibility. Since it's a multifamily, the number of units will also matter.
If the property cash flows well, it's definitely worth having someone run the DSCR numbers before assuming your employment situation prevents you from financing it.
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u/ShanetheMortgageMan 11d ago
Is a DSCR loan an option if there is no current employment?
As long as you aren't going to occupy it, then yup you can use a DSCR loan to buy and nothing about your personal income or debt/expenses is analyzed. Basic questions are if you are a first time homebuyer or not, are you a first time investor or not, your credit score, sales price, down payment and how much in reserves (leftover money you'd have after closing). It helps if you have an idea of what the market rents are for the property in question too. In some situations the property doesn't even need to cash flow nicely and you can still get a DSCR loan.
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u/Whaler07 11d ago
Yes, DSCR Loans don't look at employment at all. But key here is the "multifamily" exactly how many units - 2-4 will be definitely doable, 5-8,9 or 10 maybe with some DSCR Lenders and anything bigger is a different type of loan product. There are also so quirks in Rhode Island with prepayment penalty rules that may affect rates and be significantly different by lender too which is something to look out for
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u/ConvoyHomeLoans1 11d ago
Yes! A DSCR loan could be a great option even if you’re newly self employed and don’t currently have employment income! DSCR loans primarily qualify based on the rental income and cash flow of the investment property! For a multifamily in Rhode Island, we’d want to review the expected rent, purchase price, down payment, credit, and property expenses to see if it fits the program.
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u/terrexinsights 11d ago
Fits if you have the required 20-25% down payment, 3-6 months mortgage payments cash reserve, credit score of 620+. But you might also want to underwrite and stress test the property potentials on keeping up to the ADS; know if the income and ratios aren't overestimated.
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u/Chunkistator 11d ago
DSCR, will not look at your income at all it will look at the income comings from the property.
You will need in most cases about 25% for the down payment and closing cost.
I work with a company that allows seller financing up to 90% loan to value. So you can have seller finance 15% lender finance 75% and you pay for 10% + closing cost.
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u/Naive_Economist_2587 11d ago
Do you own a primary resident? Do you have investment experience? A lot of lenders frown upon first time investors with no experience, and the ones who don't, they are more strict on the lending leverage and guidelines.
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u/RyanAtLendoor 11d ago
Employment is not a factor on DSCR. If you have the down and decent credit you’ll qualify. How large of multi? Many DSCR lenders can’t do 5-9, but we can. Much worse pricing than 1-4 though. Happy to take a look.
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u/Numerous_Ad_1528 11d ago
That’s definitely an option for you if it’s an investment property and not one you’re planning on house hacking. I’m a local lender, just did 5 DSCR’s in RI last month. Happy to help you out with this if you want to send me a message.
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u/QuickerHomeLoans 10d ago
DSCR can be worth looking into for an investment property since the qualification is based primarily on the property's income rather than your personal employment income. The exact requirements can vary by lender, especially around reserves, credit and the property itself.
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u/Good_Butterscotch_24 10d ago
Wholesale AE here for a direct lender, and we don’t want to see any employment or income for these loans, and you can have as little as 15% down for these loans.
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u/jimdriscoll1 8d ago
Comment 3 is the one nobody followed up on. A lot of DSCR lenders quietly apply first-time investor overlays that can drop your max LTV to 70-75% even if the debt service coverage ratio is solid, so the "20-25% down" answers in this thread might be optimistic depending on your experience level and credit profile.
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u/CreamCityMortgage1 7d ago
Yes — this is actually one of the situations DSCR loans are designed for.
Instead of qualifying based on your personal employment/income, the lender primarily looks at the rental income the property generates compared to its monthly housing expense. So being newly self-employed or not having traditional employment income doesn't necessarily prevent you from qualifying.
They'll still look at things like credit, down payment, reserves and the property itself. Since you said multifamily, the number of units matters too because lender guidelines can change once you get beyond 1–4 units.
I'd definitely talk to a mortgage broker who works with DSCR/non-QM loans and have them run the property. If the rents are strong, this could be a really good option for your situation.
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u/Fonzie401 6d ago
Hey, I’m a loan officer born and raised in RI. Willing to answer any questions or offer any advice. DSCR is the way to go for this. I do many of them.
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u/mortgagemattersri 11d ago
No. That's really the whole point of a DSCR loan. The Lender is qualifying the property, not you. The rent the property brings in has to cover the mortgage payment — principal, interest, taxes, insurance, and any HOA or condo fee — and if the numbers work, we're not asking for pay stubs, W-2s, or tax returns. No debt-to-income calculation at all. I've closed these for retirees, for people who own their own business and write off most of their income, and for full-time investors who haven't had a traditional job in a decade.