If you own rental property in Philadelphia, you may have noticed that financing has gotten harder to find. Several lenders have stepped back from Philadelphia County entirely. That doesn’t mean the money has dried up. It means you need to know where to look.

I’ve been in the mortgage business for 30 years and have owned Old Glory Mortgage, Inc. since 2007. In that time, few loan programs have helped real estate investors as much as the DSCR loan. Here’s what it is, why it’s so useful, and how you can still get one on a Philadelphia property today.

What Is a DSCR Loan?

DSCR stands for Debt Service Coverage Ratio. A DSCR loan is an investment property mortgage that qualifies you based on the property’s rental income, not your personal income.

With a conventional loan, the lender wants your tax returns, W-2s, pay stubs, and a debt-to-income calculation. With a DSCR loan, the lender asks a simpler question: does this property bring in enough rent to cover its own mortgage payment?

The ratio is calculated like this:

DSCR = Monthly Rent ÷ Monthly PITIA

PITIA is the full monthly housing cost: principal, interest, property taxes, homeowners insurance, and any HOA or condo dues.

Here’s a simple example. Say you own a duplex in South Philadelphia. The two units rent for a combined $2,800 a month. The proposed payment, including taxes and insurance, is $2,300 a month. Divide $2,800 by $2,300 and you get a DSCR of about 1.22.

A ratio of 1.00 means the rent exactly covers the payment. Anything above 1.00 means the property produces more income than it costs to carry. Many lenders look for 1.00 or higher, and stronger ratios usually earn better pricing. Some lenders will even consider properties below 1.00 with a larger down payment or stronger credit.

Why DSCR Loans Are So Useful for Investors

DSCR loans solve problems that stop a lot of good investors cold with conventional financing.

  • No tax returns or pay stubs. Self-employed investors often write off enough expenses that their tax returns understate what they really earn. A DSCR loan sidesteps that issue because the lender focuses on the property.
  • No debt-to-income ceiling. Once you own several financed properties, conventional DTI limits can stop your growth. DSCR loans evaluate each property on its own cash flow.
  • No conventional property-count limit. Conventional financing caps how many financed properties you can have. DSCR lenders generally don’t apply that same cap, which lets you keep scaling a portfolio.
  • You can close in an LLC. Many investors prefer to hold rentals titled in a business entity. Most DSCR lenders allow it, typically with a personal guarantee.
  • Purchases and refinances. You can use a DSCR loan to buy, to refinance into better terms, or to do a cash-out refinance and pull equity for your next deal.
  • A faster, simpler process. With less personal income documentation to gather and review, files often move more smoothly.

What If the Property Isn’t Fully Rented?

This is one of the most common questions I get, and the answer surprises a lot of people. A vacant unit doesn’t automatically disqualify you.

When the appraiser values an investment property, they also estimate what it should rent for based on comparable rentals nearby. For a single-family home, that’s done on a Comparable Rent Schedule, often called a 1007. For a 2- to 4-unit property, the rent analysis is built into the small residential income property appraisal.

Many DSCR lenders will use that market rent figure to calculate the ratio, even if a unit is empty or the current lease is below market. That’s a big advantage if you just finished a renovation, are between tenants, or bought a property with below-market leases. Each lender sets its own rules here, which is exactly why working with a broker who knows the lender landscape matters.

DSCR Loans in Philadelphia: Fewer Lenders, But Not Zero

Over the last few years, a number of lenders have pulled back from Philadelphia County. Fraud problems in the local investment market led some lenders to stop accepting Philadelphia properties altogether. Others added restrictions that make many deals unworkable.

For investors, that’s frustrating. You can have a solid property, good credit, and strong rents, and still get turned down simply because of the zip code. Some borrowers assume that means DSCR financing isn’t available in the city anymore.

That’s not the case. I still work with lenders who are very much active in the Philadelphia market and want good investment loans here. Because I’m a broker, I’m not tied to one bank’s appetite. If one lender won’t touch the city, I can take your file to one that will.

Philadelphia remains one of the strongest rental markets on the East Coast. It has deep renter demand, a large stock of row homes and small multifamily buildings, and prices that still make cash flow possible. Investors shouldn’t have to walk away from that because other lenders did.

A Recent Philadelphia DSCR Closing

In early 2025, I closed a cash-out refinance on a 2-unit property in Philadelphia. The owner wanted to pull equity out to fund their next investment.

There was one catch: the property wasn’t fully rented at the time. With a conventional loan, that could have been a dealbreaker. Instead, we placed the loan with a DSCR lender that used the appraiser’s market rent estimate to qualify the property.

The result was a cash-out refinance up to 75% of the property’s appraised value, in a city where many lenders weren’t even taking applications. That’s the kind of deal I want to do more of, and it’s the kind of deal that’s still very possible today.

What You’ll Typically Need

Every lender is different, but most DSCR loans look at a similar set of factors:

  • Credit score. Minimums vary by lender, and higher scores generally unlock better terms and higher loan amounts.
  • Down payment or equity. Purchases often require 20% to 25% down. Cash-out refinances commonly go up to 75% of the appraised value.
  • Reserves. Lenders usually want to see several months of payments set aside in the bank after closing.
  • Property type. Single-family homes, 2- to 4-unit buildings, townhomes, and many condos are eligible. Some lenders also finance short-term rentals and larger multifamily.
  • Investment use only. DSCR loans are business-purpose loans for properties you rent out, not homes you live in.

Let’s Talk About Your Next Investment Property

Whether you’re buying your first rental or your fifteenth, refinancing a property in Philadelphia, or pulling cash out to grow your portfolio, I’d be glad to help. Old Glory Mortgage, Inc. serves investors across all of Pennsylvania.  With our office located in Paoli, most of my clients come from Philadelphia, Chester, Montgomery, Bucks, and Delaware counties.   I can also broker investment property and commercial loans in all 50 states.

If another lender told you no because your property is in Philadelphia, give me a call. Contact Old Glory Mortgage today for a no-obligation conversation about your DSCR loan options.

Old Glory Mortgage, Inc. NMLS #131293. Loan programs, terms, and eligibility are subject to lender approval and may change without notice. This article is for general information only and is not a commitment to lend.