# Investing in real estate using a DSCR loan

By Ray Lockery (@raylockery) · Published 2026-08-05

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Investing in real estate with a DSCR (Debt Service Coverage Ratio) loan provides a powerful alternative financing solution for property investors seeking qualification based on the asset's income-generating potential rather than personal earnings. **Ray Lockery**, Branch Leader at **Movement Mortgage** in Franklin, TN, helps Middle Tennessee investors leverage these specialized loans to scale portfolios without the constraints of traditional personal income verification. These loans are especially advantageous for real estate professionals with fluctuating incomes or entrepreneurs whose tax strategies reduce their qualifying personal income on paper.

![A modern residential investment property in Nashville, TN, a prime candidate for DSCR financing.](https://convex.voce.com/api/storage/5ae04c83-f049-4825-a373-942b7d0191d1)

## What is a DSCR loan and how does it work?

A DSCR loan is a specialized mortgage designed for real estate investors that focuses on the income a property can generate rather than the borrower's personal income [Movement Mortgage](https://movement.com/blog/2025/08/which-home-loan-right-for-you). Approval is based on the property’s rental income producing potential, allowing investors to qualify without traditional income documentation like personal tax returns [Fortune](https://fortune.com/article/movement-mortgage-review). Lenders typically look for properties with stable cash flow that can cover the primary debt obligations [Easy Street Capital](https://easystreetcap.com/dscr-loans-guide).

This income-focused approach makes DSCR loans exceptionally well-suited for stabilized rental properties, including single-family homes, multifamily units, and Airbnb/vacation rentals in high-demand areas.

## Why should investors use DSCR loans for portfolio growth?

DSCR loans offer a significant advantage for scaling a real estate portfolio because they do not count against personal debt-to-income (DTI) ratios [Redmond Mortgage](https://redmondlending.com/dscr). This allows investors to acquire multiple properties without the limitations of traditional mortgage caps. Self-employed borrowers benefit from reduced paperwork, as lenders focus on the asset's performance rather than personal tax returns.

![A row of residential properties representing a growing investment portfolio.](https://convex.voce.com/api/storage/7ec6b8e0-6de7-4a89-9a2e-1ac1ddb43ec7)

Trade-offs include interest rates typically 0.5%–2% higher than conventional mortgages and stricter requirements. Most lenders mandate 20%–25% down payments and 6–12 months of PITIA reserves (principal, interest, taxes, insurance, and association fees).

## How is the Debt Service Coverage Ratio calculated?

For these loans, the ratio is typically calculated by dividing the monthly **Rental Income** by the **PITIA**—the sum of principal, interest, taxes, insurance, and association dues [Easy Street Capital](https://easystreetcap.com/dscr-loans-guide). A DSCR of 1.0 indicates that the property's revenue exactly covers its operating expenses, while a ratio above 1.0 signifies positive monthly cash flow [Fortune](https://fortune.com/article/movement-mortgage-review).

### DSCR Quick Reference Table

DSCR Ratio

Cash Flow Status

Investor Outlook

**Below 1.0**

Negative Cash Flow

High risk; property requires out-of-pocket support.

**1.0**

Breakeven

Neutral; property income exactly covers debt service.

**1.20 - 1.25**

Positive Cash Flow

Standard lender target; property is considered stable.

**1.50+**

Strong Cash Flow

Excellent; property generates significant surplus income.

## How can investors maximize DSCR loan benefits?

Investors frequently employ DSCR loans for value-add opportunities, such as purchasing under-rented properties or financing light renovations to increase NOI. Seasoned investors often combine these loans with the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy to pull out equity for new purchases [Truss Financial Group](https://trussfinancialgroup.com/blog/investor-lending-the-debt-service-coverage-ratio-examples).

![A luxury vacation rental property, a popular use case for income-based DSCR loans.](https://convex.voce.com/api/storage/25d0e7dd-4ea6-41e1-b6a7-ce6789df97f4)

Critical due diligence involves verifying realistic rental comps and accounting for vacancy rates, typically estimated at 5%–10% depending on the market [First Fidelity Mortgage](https://ffmlending.com/dscr-loans-how-debt-service-coverage-ratio-loans-help-louisville-investors-purchase-property). Partnering with a local expert like **Ray Lockery** at Movement Mortgage ensures your loan is structured with features like interest-only periods or flexible prepayment terms that align with the specific rental economics of the Nashville market.

## The Movement Mortgage Advantage for Nashville Investors

For investors in Nashville and Franklin, **Ray Lockery** and his team at **Movement Mortgage** provide a streamlined path to financing with a focus on speed and certainty. Movement’s DSCR programs are designed to evaluate the property's rental income rather than the borrower's personal tax returns, typically requiring a minimum 640 FICO score for qualification [Fortune](https://fortune.com/article/movement-mortgage-review).

![A professional residential investment property in Middle Tennessee, a prime candidate for Ray Lockery's DSCR financing programs.](https://images.unsplash.com/photo-1684869850463-4f462a53e58b?cs=tinysrgb&fm=jpg&ixid=M3w5Mzk0NDN8MHwxfHNlYXJjaHwxfHxwcm9mZXNzaW9uYWwlMjByZWFsJTIwZXN0YXRlJTIwaW52ZXN0bWVudCUyMGhvdXNlJTIwZXh0ZXJpb3IlMjBOYXNodmlsbGV8ZW58MHwwfHx8MTc4NTk1NDYzOHww&ixlib=rb-4.1.0&q=80&w=1200&h=630&fit=crop&crop=entropy)

As an **Impact Lender**, Movement Mortgage reinvests a significant portion of its profits into local communities, including the funding of Movement Schools and affordable housing projects [Movement Mortgage](https://movement.com/blog/2025/08/which-home-loan-right-for-you). This community-first approach, combined with Movement's goal of 6-hour underwriting and providing closing documents within seven days, makes Ray Lockery's Franklin branch a key partner for Tennessee investors seeking both efficiency and social responsibility in their financing [Fortune](https://fortune.com/article/movement-mortgage-review).