Investing in real estate can be a great way to build long-term wealth, generate rental income, and expand your investment portfolio. However, getting traditional mortgage financing for an investment property isn’t always straightforward.
For some real estate investors, the biggest challenge isn’t whether the property can generate enough rental income. Instead, it may be proving enough personal income through tax returns and other traditional documentation to qualify for the loan.
That’s where a DSCR loan may offer another option.
At Indigo Mortgage, Ben Lucero and his team work with borrowers throughout New Mexico who are purchasing, refinancing, or looking to access equity from residential investment properties. A DSCR loan can allow qualified borrowers to use the cash flow generated by the investment property to qualify rather than relying on traditional personal income documentation.
What Is a DSCR Loan?
DSCR stands for Debt Service Coverage Ratio.
Simply put, a DSCR loan looks at the income generated by an investment property and whether that income can cover the property’s loan payment.
Instead of qualifying primarily through traditional personal income documentation, the program described by Indigo Mortgage uses the property’s lease agreement and cash flow to determine qualification.
This can make DSCR financing particularly useful for real estate investors whose financial situation doesn’t fit neatly into the requirements of a traditional mortgage.
How Does a DSCR Loan Work?
The basic idea behind a DSCR loan is straightforward: Can the investment property’s rental income cover the loan payment?
For example, if you’re purchasing a residential investment property that already has a lease in place, Indigo Mortgage may be able to use that lease agreement to qualify the purchase, provided the rental income covers the required loan payment.
That means borrowers may not need to provide tax returns or other income documentation to qualify under this program.
Of course, borrowers still need to meet the loan’s other qualification requirements, including having a qualifying credit score.
No Tax Returns or Other Income Needed
One of the most notable features of the DSCR loan program is how income is evaluated.
Traditional mortgage programs may require borrowers to provide documentation such as tax returns to demonstrate their personal income. For some investors, particularly those with multiple properties or more complicated finances, that process can make financing an investment property more challenging.
With the DSCR program available through Indigo Mortgage, qualification focuses on the investment property’s cash flow.
If the lease agreement demonstrates sufficient rental income to cover the loan payment, the borrower may be able to qualify without providing tax returns or other income documentation.
For investors, that can create another path to financing a residential rental property.
Using a DSCR Loan to Purchase an Investment Property
Are you considering purchasing another rental property in New Mexico?
A DSCR loan could potentially help finance the purchase.
If the property already has a lease in place, that lease can be used to demonstrate the property’s rental income. As long as the lease income covers the loan payment and the borrower meets the program’s other requirements, the property may qualify for DSCR financing.
This can be especially valuable for investors who want the property’s income-producing potential to play the central role in the financing decision.
Instead of asking only, “How much does the borrower make?” DSCR financing puts greater emphasis on another important question:
Does this investment property generate enough cash flow to support its financing?
Refinancing an Investment Property With a DSCR Loan
DSCR loans aren’t limited to purchasing new investment properties.
If you already own a residential investment property, you may also be able to use a DSCR loan to refinance it.
According to Indigo Mortgage’s DSCR program, the property’s lease agreement can be used for qualification as long as the rental income covers the new loan payment.
That may give existing property owners another financing option without requiring the traditional income documentation associated with many mortgage programs.
Whether you’re reviewing your current financing or looking for a loan structure that better fits your investment property, talking with an experienced local mortgage professional can help you understand the options available.
Can You Do a Cash-Out With a DSCR Loan?
The program may also allow qualified borrowers to pursue a cash-out refinance on an investment property they already own.
Again, the property’s lease and cash flow are central to qualification. If the lease agreement covers the new loan payment and the borrower satisfies the program’s other requirements, a DSCR loan may provide an option for accessing equity from the property.
For established real estate investors, this can make DSCR loans worth exploring when reviewing financing options for properties already in their portfolio.
Who Should Consider a DSCR Loan?
A DSCR loan may be worth discussing if you:
- Own residential investment property
- Are purchasing a residential rental property
- Have a property with a lease already in place
- Want to refinance an existing investment property
- Are interested in a cash-out refinance
- Prefer a loan qualification process focused on property cash flow rather than traditional personal income documentation
Every borrower’s situation is different, and a DSCR loan still has qualification requirements, including a qualifying credit score. That’s why it’s important to speak with a mortgage professional who can review your individual property and financing needs.
Why Work With a Local New Mexico Mortgage Company?
Investment properties aren’t one-size-fits-all, and neither is financing.
Working with a local mortgage company gives New Mexico investors the opportunity to discuss their goals with a team that understands the local market and can explain available financing options.
Ben Lucero and Indigo Mortgage help borrowers understand mortgage programs and determine which options may fit their circumstances.
Whether you’re purchasing your next residential investment property, refinancing one you already own, or considering a cash-out option, having a knowledgeable mortgage professional available to answer your questions can make the financing process easier to understand.
Talk to Ben Lucero About DSCR Loans in New Mexico
If you own an investment property or are thinking about purchasing one, a DSCR loan may provide a different way to qualify for financing.
Rather than relying on tax returns or other personal income documentation, the DSCR program available through Indigo Mortgage uses the property’s lease agreement and cash flow to determine whether the rental income covers the loan payment.
The program can be used for qualifying investment-property purchases as well as certain refinances and cash-out transactions, subject to borrower and loan requirements.
If you’d like to learn whether a DSCR loan could work for your investment property, contact Ben Lucero and the team at Indigo Mortgage.
Indigo Mortgage is your trusted local mortgage company and New Mexico’s Broker of the Year for 2026.