The DSCR Playbook for Mortgage Brokers

DSCR loans are the fastest-growing segment of investor lending. Brokers who can execute DSCR confidently close more files, earn higher commissions, and build stickier client relationships. Here's how to add DSCR to your toolkit.

Why DSCR Matters for Brokers

Three reasons DSCR deserves a spot in your playbook:

1. Investor borrowers keep coming back — you close one deal, you close five more as they scale
2. DSCR underwriting is fast, clean, and doesn't touch borrower tax returns
3. Commission potential per file is solid, and deal size often scales with investor growth

DSCR Basics (Quick Refresher)

DSCR = NOI ÷ Debt Service. For single-family residential investor loans:

• NOI ≈ gross rent minus taxes, insurance, HOA
• Debt Service = new loan's PITI
• Ratio typically 1.0 minimum, 1.25 preferred for best pricing

Identifying DSCR-Fit Borrowers

Signals a borrower is a DSCR candidate:

• Self-employed with complex tax returns
• Strong borrower credit (680+)
• Already owns 2+ investment properties
• Maxed out conventional investor slots (10+ properties)
• Wants to close in an LLC
• Rental income is the primary qualifier

Files That Close Fast

To close in 5-7 days:

1. Lease in place or solid rent comps
2. Clean title with no cloud issues
3. Purchase contract fully executed
4. LLC operating agreement + articles (if closing in entity)
5. Recent bank statements for down payment
6. Landlord policy quote
7. Borrower credit pulled, 680+

The DSCR Stress Test

Before submitting, run the file yourself:

1. Confirm lease or defensible market rent
2. Calculate PITI at expected rate
3. Divide gross rent by PITI — should be ≥ 1.25
4. If borderline, consider: larger down payment, IO product, buydown, different lender

Common Objections From Borrowers

Products to Know

• 30-year fixed — most common, simplest
• 10/1 ARM — often 50+ bps cheaper, fits investors planning to refi or sell in 7-10 years
• Interest-only (first 10 years) — IO improves cash flow for 10 years then amortizes over remaining 20
• 5/6 ARM — for borrowers prioritizing cash flow and confident in refi environment

Pricing Factors to Understand

1. LTV (65% vs. 75% vs. 80%) — bigger difference than borrowers realize
2. DSCR ratio (1.0 vs. 1.25 vs. 1.5)
3. FICO (680 vs. 720 vs. 760)
4. Prepay structure (5-year step-down vs. no prepay)
5. Cash-out vs. rate-and-term
6. Property type (SFR, 2-4 unit, condo)

Commission and Comp

DSCR comp is typically 1-2% lender-paid or 1-3% borrower-paid, similar to conventional investor loans. Deal sizes are often higher on investor properties, so absolute dollars per file tend to be strong.

Growing a DSCR Book

1. Target your existing LO book for investor clients
2. Sponsor a local REIA meetup
3. Build content on LinkedIn targeting investors
4. Partner with investor-focused real estate agents
5. Ask every closed borrower for a referral — investors know investors

The Bottom Line

DSCR lending isn't complicated once you've done 3-5 files. The underwriting is cleaner than conventional, the borrowers are more sophisticated, and the repeat business is substantial. Brokers who add DSCR to their toolkit almost universally wish they'd done it sooner.

Ready to send us a file? Pimlico's broker desk funds DSCR loans in 5-7 days with dedicated processor support on every file.