DSCR Loans in Michigan: Financing Investment Properties Without Tax Returns
DSCR loans qualify based on the property's rental income, not your personal income. Here's how they work and why Michigan real estate investors are using them.
DSCR stands for Debt Service Coverage Ratio. It is a loan product designed for real estate investors who want to qualify based on the income the property generates — not their personal W-2 or tax returns.
The math is straightforward: if the monthly rent covers the mortgage payment (principal, interest, taxes, insurance), you generally qualify. A DSCR of 1.0 means the rent equals the payment. Most lenders want 1.0 to 1.25 or higher.
This is especially useful for self-employed investors, those with complex tax situations, or anyone who has maximized write-offs and shows low taxable income on paper. Traditional loans would penalize you for that. DSCR does not.
In Michigan, DSCR loans work well for single-family rentals, small multifamily properties, and short-term rentals in markets like Detroit, Grand Rapids, and the lake communities.
Down payments typically start at 20–25%. Rates are slightly higher than primary residence loans, but the flexibility in qualifying often makes it the right tool for the job. If you are building a rental portfolio in Michigan, let's talk through the numbers.