Learn from what others get wrong — and close your next deal with confidence.

DSCR loans open the door to flexible, no-income-verification financing for real estate investors — but they aren’t plug-and-play.

👉 In fact, some of the most experienced investors still run into issues that delay funding, increase rates, or even kill the deal entirely.

Here are five common DSCR loan mistakes — and how to avoid them with smart planning and the right lending partner.

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❌ Mistake #1: Not Knowing the Property’s True DSCR

DSCR is everything.

If you don’t understand your Debt Service Coverage Ratio before applying, you could:

• Miss lender guidelines (usually DSCR ≥ 1.00)
• Overestimate income or underestimate expenses
• Waste time on a deal that won’t work without restructuring

✅ Solution:

Before making an offer, calculate your DSCR = Rent ÷ PITIA
Ask for a rental analysis or appraisal with a 1007 rent schedule.
Need help? We’ll run it for you in minutes.

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❌ Mistake #2: Submitting Incomplete or Unsupported Income Docs

While DSCR loans don’t require personal income, they still require:

• Lease agreements or
• 12-month rental history or
• Market rent from appraisal or
• AirDNA or STR projections

Some investors assume lenders will take Airbnb income at face value — not true.

✅ Solution:

Collect STR data, appraiser rent comps, or lease terms early.
Work with a lender experienced in STR/DSCR underwriting.

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❌ Mistake #3: Buying a Deal That Barely Breaks Even

DSCR loans get harder to approve — or much more expensive — when:

• DSCR < 1.00
• Rent doesn’t cover mortgage
• HOA dues or insurance are high
• You’re stretching for appreciation over cash flow

✅ Solution:

Target DSCR of 1.10+ to build in cushion.
Ask us to run the numbers before you write the offer.

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❌ Mistake #4: Assuming You Can Buy in an LLC Without Planning Ahead

Many DSCR lenders allow LLC purchases, but:

• The LLC must be registered
• You may need to personally guarantee the loan
• Ownership and EIN must match your application docs

✅ Solution:

Set up your LLC before applying, not during escrow.
We’ll advise you on exact LLC name, structure, and title flow.

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❌ Mistake #5: Choosing a Lender Who Doesn’t Specialize in DSCR

Not all lenders understand:

• How to underwrite short-term rentals
• The nuances of market rent vs. lease income
• How to structure multiple-property purchases
• What DSCR investors really care about

Result? Missed opportunities, higher rates, and frustrating closings.

✅ Solution:

Partner with a lender (like PRMI) that works with real estate investors daily — not just conventional homebuyers.

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🏢 Why PRMI?

We help investors:

• Avoid mistakes that derail closings
• Maximize approval potential with accurate DSCR analysis
• Qualify short- and long-term rentals with the right docs upfront
• Scale portfolios with repeatable, investor-friendly lending

You bring the deal. We help you close it smarter.

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👇 Want to Make Sure Your Next DSCR Deal Closes Smoothly?

Let’s review your deal structure, run the DSCR math, and spot red flags early — before you get under contract.