A good fit if
- The rent won't cover the full payment
- You're buying for appreciation or long-term value
- You have strong credit and a larger down payment
Probably not if
- The property already covers its payment (a standard DSCR loan is cheaper)
- You're short on reserves
- You'll live in the property
How No-Ratio DSCR Works
A standard DSCR loan requires the rent to cover the payment, usually at 1.0x or better. A no-ratio loan drops that test. The lender still looks at credit, down payment, reserves, and the property, but it doesn't require the rent to cover principal, interest, taxes, insurance, and HOA.
Lenders offset the extra risk with tighter terms: a lower maximum LTV (commonly 70–75% on a purchase and 65–70% on a refinance), pricing adjustments, and at some lenders a higher credit score or more reserves. Score minimums range from about 640 at some lenders to 700–720 at others.
No-Ratio DSCR Loan Requirements
- Credit: from about 640 at some lenders; 700–720+ opens the highest LTVs at others.
- Down payment: usually 25–30% on a purchase. At some lenders, 75% LTV needs 740+ credit, with 70% at 720.
- Cash-out: commonly capped around 65% LTV, sometimes lower.
- Reserves: often 6 months or more, since there's no rent cushion.
- Property: 1–4 unit homes and condos; some lenders exclude short-term rentals or rural properties on no-ratio.
More detail is in the no-ratio DSCR loans guide.
When a No-Ratio Loan Makes Sense
- High-cost markets. In much of California, prices are high compared with rents, so even good properties can land below 1.0x.
- Long-term plays. You're buying for appreciation, a future rehab, or to live in later, and can carry the gap.
- Properties in transition. Below-market rents you expect to raise over time, where the law allows.
- Vacant or hard-to-rent properties. Some lenders allow no-ratio where the appraiser's rent comes in low.
Example: a Los Angeles duplex rents for $5,200 a month combined, and the full payment at 25% down is $6,400. That's 0.81x, short of a standard DSCR loan. Options: go no-ratio at 70–75% LTV, look at a 0.75x program, or test whether interest-only brings the ratio closer to 1.0x. I'd price all three before choosing.
Before you go no-ratio: check whether a slightly larger down payment or an interest-only option gets you to 1.0x. A standard DSCR loan usually prices better. Try it in the DSCR calculator.
No-Ratio vs. Standard DSCR
| No-ratio DSCR | Standard DSCR (1.0x+) | |
|---|---|---|
| Rent test | None | Rent must cover the payment |
| Typical max purchase LTV | 70–75% | 75–80% (85% at some) |
| Credit | Often 640–720+ | Often 620–680+ |
| Reserves | Usually more | Often 2–6 months |
| Pricing | Higher | Lower |
How to Qualify
- Run the property through the DSCR calculator to see how far below 1.0x it lands.
- Plan for 25–30% down, plus closing costs and several months of reserves.
- Check your credit score; a jump past 700 or 720 can change your maximum LTV.
- Budget for the monthly shortfall between rent and payment, and for vacancies.
- Send me the scenario, and I'll compare no-ratio with the other options side by side.
Documents You'll Need
- Photo ID and credit authorization
- Bank or investment statements for the down payment, closing costs, and reserves
- Purchase contract, or the mortgage statement on a refinance
- Insurance quote
- LLC documents if you're borrowing in an entity
No tax returns, pay stubs, or leases are needed to qualify.
No-Ratio DSCR FAQ
Is a no-ratio loan the same as a 0.75x DSCR loan?
No. Some lenders allow ratios down to about 0.75x with a rent test still in place. No-ratio removes the test entirely. Both cost more than a loan at 1.0x or higher.
Do I need to show I can cover the negative cash flow?
There's no income test, but lenders usually require more reserves, which is cash or investments that would cover several months of payments.
What credit score do I need for a no-ratio DSCR loan?
About 640 at the most flexible lenders, usually with a lower LTV. Many programs want 700–720+ for their best terms.
Can I do a cash-out refinance with no ratio?
Often, yes, at a lower LTV than a purchase, commonly around 65% or less.
Can I refinance into a standard DSCR loan later?
Yes. Once rents rise and the property covers its payment, refinancing into a standard DSCR loan may lower your rate. Check the prepayment penalty first.
Business-purpose loans for investment properties in California and other states where permitted. Guidelines shown are typical ranges from published Non-QM lender guidelines as of October 2026 and are not a commitment to lend. Your actual terms depend on credit, property, loan amount, and the lender's current guidelines, and can change without notice.