Alaska DSCR Loans for STR Financing

Frequently Asked Questions

What is a DSCR loan and how does it work for Alaska real estate investors?

A DSCR loan (Debt Service Coverage Ratio loan) is designed for real estate investors who prefer to qualify based on the income of a rental property rather than personal earnings or W-2 income. The loan is approved when the property’s net income is sufficient to cover its debt service, making it easier for investors with complex or fluctuating finances to secure funding. DSCR loans are especially helpful in states like Alaska, where seasonal STRs near destinations like Anchorage or Fairbanks can generate high returns but don't always fit within traditional lending models.

How is DSCR calculated in a typical loan scenario for Alaska investors?

In Alaska, DSCR is calculated by dividing a property’s net operating income (NOI) by its total annual debt obligations. For example, if an Alaskan rental generates $72,000 in NOI and the yearly debt service is $60,000, the DSCR would be 1.20. That means the property produces 20% more income than needed to repay the loan, which helps investors meet Alaska lender requirements. A DSCR of 1.00 is often the minimum needed, but many Alaska lenders prefer 1.15–1.25 for better rates. Whether you're investing in Anchorage, Fairbanks, or coastal STRs, understanding DSCR in Alaska ensures you're working with financially viable properties that align with lending guidelines.

What is considered a good DSCR ratio when applying for financing?

A good DSCR ratio in Alaska usually starts around 1.20. While some lenders may approve loans with a 1.00 DSCR, this is considered the bare minimum. A 1.20 ratio means the property earns 20% more than its debt service, which reassures lenders and can help you secure more favorable terms. In Alaska’s seasonal or remote rental markets—like Anchorage or Juneau—a higher DSCR is especially valuable for showing financial stability. Understanding what counts as a good DSCR in Alaska helps investors make smart financing decisions in variable income environments.

Can I qualify for a DSCR loan if my personal income is limited?

Yes, you can qualify for a DSCR loan even if your personal income is limited. DSCR loans, often referred to as Airbnb loans when used for short-term rental properties, are designed to approve borrowers based on the income the property generates—not personal W-2s, tax returns, or debt-to-income ratios. Lenders calculate the property's debt service coverage ratio to determine if the income is sufficient to support the loan. As long as the DSCR meets the required threshold—usually 1.00 or higher—you can often be approved regardless of personal income. This makes Airbnb loans ideal for self-employed investors, business owners, or anyone scaling a rental portfolio without relying on traditional underwriting standards.

How does a lender evaluate rental income when approving a DSCR loan?

Alaska lenders determine DSCR loan eligibility by evaluating the rental income the property generates. In Alaska, this process usually involves analyzing signed leases, market rent studies, or STR earnings to establish monthly income. That income is then compared to the property's loan obligations to calculate the DSCR. If the DSCR is 1.00 or above, Alaska investors can often qualify—even with non-traditional or limited personal income. DSCR loans in Alaska are especially helpful for self-employed borrowers or those expanding into remote markets. Understanding how DSCR income evaluation works in Alaska gives investors a path to portfolio growth without relying on W-2s.

What’s the minimum debt service coverage ratio required for approval?

In Alaska, most DSCR lenders require a minimum DSCR of 1.00, which shows the property can fully cover its debt service through rental income. Some lenders in Alaska may consider DSCRs as low as 0.75, though this is often reserved for highly qualified investors with strong reserves. A DSCR of 1.20 or more is ideal in Alaska markets like Anchorage, Juneau, or Fairbanks, where seasonal demand can affect cash flow. Alaska investors using DSCR loans should focus on income-producing properties that exceed the minimum ratio to strengthen their application. DSCR lending in Alaska favors consistent income and well-structured deals. Understanding the DSCR threshold in Alaska helps ensure you're positioned to access flexible financing without relying on traditional income documentation.

Who should consider using a DSCR instead of a traditional loan?

These loans are perfect for self-employed individuals, LLCs, and investors managing multiple properties. DSCR loans in Alaska are especially useful for vacation rental operators and investors with variable or seasonal income. Instead of relying on tax documents, Alaska borrowers qualify based on the property’s ability to cover its debt service. From Anchorage to Juneau, Alaska real estate investors turn to DSCR financing for its speed and simplicity.

Expanding your rental portfolio beyond Alaska? We also offer financing in Hawaii and California , making it easy to scale across the Pacific with the same asset-based approval process.