Question 1

Can I use a DSCR loan to buy a primary residence?

Accepted Answer

No. DSCR loans are strictly commercial-purpose products intended for non-owner-occupied investment properties. It is a violation of federal compliance to occupy a property financed under a DSCR note. For primary residences, review our first-time homebuyer guide.

Question 2

Do DSCR loans have prepayment penalties?

Accepted Answer

Yes, most DSCR loans include a prepayment penalty (typically ranging from 1 to 3 years) to protect investor yields. However, The Herd Lending can restructure or buy down these penalties if you intend to flip or refinance the asset quickly.

Question 3

How much cash reserves do I need to close a DSCR loan?

Accepted Answer

Reserve requirements depend on the property's ratio and your credit profile. Standard files typically require 3 to 6 months of PITIA reserves, which can be held in personal checking accounts, business accounts, or retirement funds.

Question 4

Can I use a DSCR loan for a short-term Airbnb rental?

Accepted Answer

Absolutely. This is one of the fastest-growing investment strategies in 2026. We have programs that use specialized short-term rental data aggregators (like AirDNA) to project seasonal cash flow instead of relying on standard long-term lease estimates.

Day: June 18, 2026

DSCR Loans for Real Estate Investors – Financing Without Tax Returns