What is a DSCR loan and can I use one for a Wisconsin rental property?
Rob Miller explains Debt Service Coverage Ratio (DSCR) loans — how Wisconsin real estate investors can qualify based on rental income instead of personal income.
Rob Miller, Branch Manager at MadCity Home Loans, explains DSCR loans — the investor's secret weapon for scaling a Wisconsin rental portfolio without W-2 income requirements.
What is a DSCR loan and can I use one for a Wisconsin rental property?
A DSCR (Debt Service Coverage Ratio) loan qualifies you based on the rental income of the property itself — not your personal income. It's specifically designed for real estate investors and self-employed buyers who have strong rental cash flow but complex personal tax returns.
How the DSCR Ratio Works
DSCR = Monthly Rental Income ÷ Monthly Loan Payment (PITI)
Most lenders want a DSCR of 1.0 or higher — meaning the property generates at least as much rent as it costs to carry. A 1.25 DSCR is even better and often unlocks lower rates.
Example: A Madison duplex renting for $3,200/month with a PITI of $2,600/month has a DSCR of 1.23 — strong enough to qualify.
Key Features of DSCR Loans
- No personal income verification: No W-2s, no tax returns, no employment history required
- Down payment: Typically 20–25% down
- Credit score: Usually 680+ minimum
- Rates: Slightly higher than conventional — typically 0.5–1.0% above primary residence rates
- Property types: 1–4 unit rentals, short-term rentals (Airbnb/VRBO), and in some cases 5–8 unit properties
- Short-term rental income: Some lenders allow us to use Airbnb or VRBO market rent estimates
Who This Is Built For
Self-employed investors who write off most of their income on taxes. Out-of-state investors buying in the Madison market. Anyone building a rental portfolio who doesn't want their personal DTI limiting how many properties they can own.
Related Post: See our full investment property guide here: Investment Property & DSCR Loans in Madison, WI.