The DSCR Loan: Why Your Investment Needs a Residential Loan Expert

Minneapolis, MN: If you’re financing a 1-8 unit rental property with a DSCR (Debt Service Coverage Ratio) loan, you need to be aware of a critical industry distinction that could make or break your deal. While these loans are technically for business purposes, they are fundamentally residential real estate transactions. This creates a dangerous gap that many investors fall into when buyers incorrectly use a commercial loan lender.

Here’s the core of the issue: commercial mortgage brokers are not required to hold a residential mortgage loan originator (MLO) license. They operate under different rules and, more importantly, a completely different mindset. Their expertise lies in large-scale apartments, office buildings, and retail centers—complex deals where the property itself is the primary focus.

DSCR loans for single-family homes or small multifamily properties(1-8 unit) are a different world. They require a deep understanding of residential appraisal standards, neighborhood comparables, and the nuances of the residential rental market. This is the domain of the licensed residential Loan Officer.

At Cambria Mortgage, every one of our originators is licensed and rigorously trained in residential lending. We understand that a four-unit building is financed, valued and underwritten differently than a 40-unit complex.

A DSCR loan is where a main qualification is that collected rent is higher than the new mortgage payment.

Because a DSCR loan is based on rent collected, we do not review the borrowers personal income for qualifying. Sounds great, but these come at a higher interest rate. As a residential lender, we can also analyze your application, and calculate income to determine if it aligns with GSE (Fannie Mae and Freddie Mac) guidelines to get a much better interest rate on a traditional home loan – something commercial lenders can’t.

When a commercial lender without residential licensing tries to handle your DSCR loan, you risk delays, incorrect structuring, or even denial due to a simple misunderstanding of residential underwriting protocol. Why take that risk?

Is Your DSCR Lender Actually Licensed for Residential?

Your residential investment deserves residential expertise. Trust the licensed professionals at Cambria Mortgage to navigate your DSCR loan with the precision and knowledge that only comes from dedicated residential lending experience.

We lend in CO, FL, IA, MN, ND, SD, and WI.

(651) 552-3691
JoeMetzler.com/apply