South Carolina DSCR Loans for STR Financing

Frequently Asked Questions

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

A DSCR loan (Debt Service Coverage Ratio loan) is designed for real estate investors who want to qualify using property income rather than personal earnings or employment verification. Lenders evaluate whether the property generates sufficient cash flow to cover its debt service. This structure is well-suited for portfolio investors and those working through LLCs. In South Carolina, where markets like Charleston, Columbia, and Greenville offer strong rental returns—especially for STRs—DSCR loans help investors secure financing faster and more flexibly than traditional lending options.

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

In South Carolina, DSCR is calculated by dividing the property's net operating income (NOI) by its total annual debt service—including mortgage, taxes, and insurance. For example, if a South Carolina rental brings in $108,000 in NOI and carries $90,000 in debt service, the DSCR would be 1.20. That extra income coverage improves approval odds. While 1.00 is often the lender minimum, most South Carolina lenders prefer higher ratios—especially for STRs in Charleston, Columbia, or Myrtle Beach. Understanding how DSCR works in South Carolina helps investors determine which properties meet lending criteria and are capable of supporting long-term portfolio growth.

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

A DSCR of 1.20 is widely viewed as a strong benchmark in South Carolina. While a 1.00 ratio may satisfy minimum lending criteria, a higher DSCR shows that your property generates enough income to cover the loan with a healthy margin. This often results in better terms and faster approvals. In markets like Charleston, Columbia, or Myrtle Beach, maintaining a good DSCR is essential for navigating both traditional and DSCR loan options. Understanding what lenders look for in South Carolina helps you structure smarter deals and reduce financing friction.

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?

In South Carolina, DSCR loans are approved based on the property’s rental income—not your personal financial background. Lenders in South Carolina typically review lease agreements, short-term rental income, or market rent reports to determine the property’s earning power. That income is then divided by the property’s annual debt payments to calculate the DSCR. A ratio of 1.00 or above is generally required. DSCR loans in South Carolina are especially useful for self-employed investors or those managing STRs. Understanding how rental income is evaluated in South Carolina allows you to qualify based on the asset—not your tax returns.

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

In South Carolina, most lenders require a minimum DSCR of 1.00 to approve a DSCR loan. Some South Carolina lenders may consider a DSCR as low as 0.75, but this often requires strong reserves or low leverage. A DSCR of 1.20 or above is preferred in South Carolina, particularly in competitive rental markets like Charleston, Greenville, or Columbia. DSCR loans in South Carolina are widely used by investors who want flexible qualification options. Understanding the minimum DSCR expectations in South Carolina can help you structure stronger deals and achieve better terms.

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 South Carolina allow borrowers to qualify using rental income, eliminating the need for tax returns or W-2s. Whether investing in Charleston, Greenville, or Columbia, South Carolina investors benefit from a flexible financing structure that streamlines the approval process and supports portfolio growth.

Expanding your rental portfolio beyond South Carolina? We also offer financing in North Carolina and Georgia , making it easy to scale across the Southeast with the same asset-based approval process.