DSCR Portfolio Loans: Consolidate Your Financing. Streamline Your Portfolio.

A DSCR (Debt Service Coverage Ratio) portfolio loan is a type of financing designed for real estate investors who own multiple income-producing properties. A DSCR portfolio loan evaluates the collective cash flow generated by the properties in the portfolio. The benefit is that it allows investors to consolidate financing for multiple properties under one loan.

An individual DSCR loan finances a single property, with approval based solely on that property’s cash flow and DSCR. A DSCR portfolio loan finances multiple properties together, assessing the combined cash flow of the entire portfolio. Another difference is that individual loans require each property to stand on its own merits, while portfolio loans consider the overall performance of all properties. This can help offset weaker performers with stronger ones. DSCR Portfolio loans can also offer more flexibility for investors with diverse holdings, whereas individual loans are more rigid and property-specific.

There’s generally no strict maximum number of properties. Practical limitations exist based on the lender’s capacity and the loan amount. Loan amounts often can range depending on the lender and the portfolio’s value. Some lenders may cap the number of properties (10 to 20) to manage risk. Other lenders focus solely on the total loan size or aggregate cash flow.

Please feel free to contact us to discuss the volume of properties you'd like to invest in.

Typical terms for DSCR portfolio loan durations are 5, 7, 10, or 30 years with 30-year fixed-rate options being popular for long-term stability.

DSCR Portoflio loans can come with fixed or adjustable rates. Fixed rates offer predictability. Adjustable rates can potentially lower initial costs.

Some shorter-term DSCR portfolio loans (5 to 10 years) may include a balloon payment at the end.,

LTV ratios for DSCR portfolio loans usually range from 65% to 80%.

This is dependent on the lender, property types, and portfolio performance.

DSCR portfolio loans can be non-recourse or recourse depending on the lender.

Non-Recourse: The lender’s only remedy in default is seizing the properties. Your assets are protected.

Recourse: The lender can pursue your assets if the portfolio doesn’t cover the debt.,

Yes. The potential cost benefits include lower closing costs and better rates.

One DSCR portfolio loan means one set of origination fees and legal costs rather than multiples for each property. An appraisal is still needed for each property however, you can sometimes get a discount on the cost per property since you are doing multiple at once.

Lenders may also offer competitive interest rates for larger loan amounts or diversified portfolios, reflecting the perceived lower risk.

Unfortunately, yes. DSCR portfolio loans include prepayment penalties, especially for fixed-rate terms, to protect lenders from early payoff losses.

Common structures include:

Step-Down Penalty Example: 5% in year 1, 4% in year 2, down to 1% in year 5, then zero.

Fixed Period Penalty Example: A penalty (3–5%) if paid off within the first 3–5 years.

Some lenders offer no-penalty options, but these are likely to come with higher rates.

Check your loan agreement for specifics.

Yes. DSCR portfolio loans are well-suited for properties held in an LLC.

Lenders typically require:

1. LLC formation documents
2. Operating agreement
3. Proof of ownership for each property The LLC structure aligns with the loan’s focus on property performance rather than personal liability.

The minimum number of properties typically required for a DSCR portfolio loan is two. This can vary by lender.

Please feel free to contact us to discuss the volume of properties you'd like to invest in.

Common documentation requirements for DSCR portfolio loans include:

1. Current tenant leases and rental income details.
2. Two years of income/expense statements or recent profit-and-loss records.
3. Professional valuations for each property.
4. Evidence of the portfolio’s aggregate cash flow.
5. Basic personal details. Tax returns or W-2s are often not required.
6. If properties are held in an LLC, articles of organization and operating agreements may be needed.

Please feel free to contact us to understand the documentation we would require for your loan.

Traditional loans emphasize personal income, credit scores and debt-to-income ratios. DSCR portfolio loans prioritize property cash flow and the aggregate DSCR. Approval can be faster for DSCR portfolio loans due to less personal financial scrutiny. Lenders may overlook weaker credit or personal income if the portfolio performs well. Traditional loans tend to have much stricter criteria.

To choose the right lender for you, ECF recommends that you consider a lender with a track record in portfolio loans, not just individual DSCR loans. It's recommended that you search for lenders offering favorable terms on property types, LTVs, and multi-state portfolios. Whilst looking, compare the interest rates, origination fees, and prepayment penalties of various lenders. For peace of mind, ensure the lender can handle your portfolio’s size and loan amount. For legitimacy, you can check reviews or ask for referrals from other investors.

Please feel free to contact us for a discussion about your project. We'd be happy to answer all and any questions.

We lend nationwide across the United States with the exception of ND & SD.

Yes however, ECF does not allow them to be in different states. The investor would be required to make a portfolio for each state they own properties.

For other lenders that do allow the investor to have properties in diffeent states, this is on the basis that the investor can provide evidence that they can service the loan (e.g., appraise properties and file liens across state lines).

Some smaller or regional lenders may restrict lending to specific states due to licensing or operational constraints.

Not always, but this is lender specific.

While individual DSCR loans typically require each property to meet a minimum DSCR, portfolio loans assess the aggregate DSCR of all properties.

This means a property with a lower DSCR (For example, 1.0 or below) can be included as long as the overall portfolio meets the lender’s threshold.

Yes but for DSCR portfolio loans, this does vary on the lender.

The types of properties generally included are:

1. Single-family rentals (SFRs)
2. Multifamily units (duplexes, triplexes, etc.)
3. Small apartment buildings
4. Mixed-use properties (with commercial and residential components)

Some lenders restrict portfolios to residential income properties only, excluding commercial or industrial assets. For example, Express Capital Financing will only include 1-4 unit properties in our portfolios. We can mix SFR's and 3 families but they will need to be consistent in the 1-4 units and residential.

The majority of lenders will want consistency except for a bank loan

Please check with your lender which properties are eligible.

If one property underperforms (e.g., low DSCR or vacancy), the loan isn’t automatically jeopardized as long as the portfolio’s aggregate DSCR meets the lender’s minimum. The strong performers can compensate for the weaker ones.

There are risks to be considered, like:

1. Severe Underperformance. If the overall DSCR drops below the agreed threshold, the lender may declare a default or require additional collateral.

2. Cross-Collateralization. Properties are often cross-collateralized, meaning that all are at risk if the loan defaults.

Yes.

Some lenders allow properties to be added through loan modification or refinancing, subject to updated appraisals and DSCR calculations.

Selling or removing a property is trickier due to cross-collateralization. Lenders may require partial payoff, refinancing, or substitution with another property to maintain the loan’s balance and DSCR.