 | The Lodge Letter
Investor Edition |
| Investor Edition · DSCR loans Let the rent qualify you.Finance move-in-ready rental homes based on what the property earns — not your tax returns, W-2s or pay stubs. | If you’re building a rental portfolio — especially with rent-to-own — DSCR loans may be the simplest path. Here’s the whole playbook in one email. | ✓ | No income docs — no tax returns, W-2s or DTI calculation. | | ✓ | Close in your LLC — keep rentals in your business entity. | | ✓ | Built for rent-to-own — a clear path from tenant to buyer. |
| | How the math works One ratio. Three zones.A Debt Service Coverage Ratio (DSCR) loan asks one question: does the home’s rent cover its monthly payment? Divide the monthly rent by the full monthly payment (PITIA — principal, interest, taxes, insurance and HOA dues). The higher the ratio, the stronger — and usually cheaper — your loan. | ● | Under 1.00 — rent falls short. Still possible on some programs with more down, stronger credit, extra reserves, or a no-ratio option. | | ● | 1.00–1.19 — break-even to solid. 1.00 means rent covers 100% of the payment — the common minimum for many programs. | | ● | 1.20 and up — strong cash flow. A cushion lenders like to see; stronger ratios typically unlock better pricing and higher leverage. |
Worked example · single-family rental| Purchase price | $325,000 | | Down payment (20%) | $65,000 | | Loan · 30-yr fixed at 7.25%* | $260,000 | | Principal & interest | $1,774 | | Property taxes | $165 | | Landlord insurance | $110 | | HOA dues | $0 | | Total monthly PITIA | $2,049 |
$2,450 ÷ $2,049 = 1.20 DSCR Market rent (appraiser’s Form 1007) covers the full payment 1.2 times over — about $400/mo left before vacancy, repairs and management. |
*Hypothetical example for illustration only — not a rate quote, loan offer or commitment to lend. Your rate, taxes, insurance, rent and terms will differ. | | The rent-to-own play Buy it ready. Rent it to own.1 | Buy move-in ready — finance a rent-ready home with a DSCR loan, in your name or your LLC. | 2 | Sign lease + option — your tenant signs a lease plus an option to buy at a set price and term. | 3 | Collect the rent — monthly rent covers PITIA; the option fee typically comes in up front. | 4 | Exit your way — the tenant buys and your loan is paid off — or the option lapses and you keep renting. |
Why move-in ready? Rent starts sooner (no rehab gap), the appraisal is cleaner because value and market rent reflect a finished home, and approval is easier — homes needing major repairs may need separate review. Four underwriting truths for rent-to-own1 | Rent counts. Option money usually doesn’t — qualifying rent is the lesser of your lease or the appraiser’s market rent; option fees and rent credits generally aren’t added in. | 2 | Match your prepay to the option term — if your tenant may buy in year 3, a 5-year prepayment penalty can bite at the sale. We can structure a shorter step-down (like 3-2-1) instead. | 3 | Show us the agreement first — lender rules on lease-purchase and option clauses vary. Share your draft early and we’ll match you to a program that accepts it. | 4 | Paper it right — have a real estate attorney in your state draft the lease-option: price, term, credits, repairs, and what happens if the tenant walks. |
| | Qualify & close What it takesCredit score 620+ 700–740+ earns the best pricing | Down payment 20–25% As low as 15% on select programs | DSCR 1.00+ Sub-1.0 and no-ratio options exist | Reserves ~6 months Of PITIA, in savings or investments | Property 1–4 units Single-family, condos, townhomes | Ownership You or LLC Personal guarantee is common | Terms 30-yr fixed ARMs and interest-only available | Purpose Buy or refi Including cash-out refinance |
Typical market ranges. Exact guidelines vary by program and are confirmed at pre-approval. Bring to the table| ☐ | Photo ID and credit authorization | | ☐ | Two months of bank statements for down payment and reserves | | ☐ | LLC documents: articles, operating agreement, EIN | | ☐ | Signed purchase contract | | ☐ | Landlord (dwelling) insurance quote | | ☐ | Draft lease / lease-option agreement |
Your path to the keys1 | Discovery call — your goals, deal and exit plan. | 2 | Scenario & pre-approval — rate and prepay options side by side. | 3 | Contract & appraisal — value plus rent schedule. | 4 | Underwriting — entity, reserves and insurance check. | 5 | Close — hand the keys to your tenant-buyer. |
| Tenant ready to buy? Send them to The Loan Lodge. I help tenant-buyers get mortgage-ready with FHA, VA, Conventional and USDA options — so the option gets exercised on schedule and you cash out on time. | Run your numbers with Todd.Bring an address — I’ll show you the DSCR before you make an offer. Or call/text (520) 536-1242 · todd@swiftmortgagebroker.com |  | Talk soon,
Todd Lodge
Senior Loan Officer · NMLS #1966537 |
P.S. Want the printable 4-page DSCR Investor Guide? Contact me and I’ll send the PDF. | The Loan Lodge at Swift Mortgage · (520) 536-1242 · theloanlodge.com Todd Lodge, Senior Loan Officer, NMLS #1966537. Swift Mortgage LLC, NMLS #1925754. Licensed in multiple states. 1050 E River Rd #302, Tucson, AZ. Equal Housing Opportunity. NMLS Consumer Access. This article is for general information only and is not a commitment to lend. Programs, rates and terms vary, change without notice and are subject to credit, property and underwriting approval. DSCR loans are business-purpose loans for non-owner-occupied investment property. Consult your attorney and tax advisor about lease-option agreements. | |
