How to Structure a DSCR Portfolio Loan for Multiple Properties

For mortgage brokers supporting real estate investors, structuring the right financing solutions can be the difference between closing a single deal and securing a long-term client. As property portfolios grow, so do the complexities of financing—especially when investors are acquiring or refinancing multiple rental properties. This is where a DSCR portfolio loan becomes essential.

A DSCR (Debt Service Coverage Ratio) loan is already a favorite among investors who want to qualify based on rental income, rather than traditional documentation like tax returns or W-2s. But when that product is applied to multiple properties within a single deal, it creates a powerful tool that simplifies portfolio expansion, reduces paperwork, and leverages the combined income of an investor’s assets.

This guide walks through how to structure a DSCR portfolio loan step-by-step—from eligibility to documentation—and how to present deals that get approved quickly by Non QM Lenders like NQM Funding.

Understanding DSCR Portfolio Loans

At its core, a DSCR loan is underwritten using the income generated by the property. For example, if a property earns $3,000 in monthly rent and the monthly principal, interest, taxes, and insurance (PITI) payments are $2,000, the DSCR is 1.50x. Most lenders require a minimum DSCR of 1.00x, but 1.25x or higher typically receives better pricing and terms.

A portfolio DSCR loan applies this same concept to multiple properties. Instead of underwriting one rental unit, lenders look at a group of properties—sometimes three, five, or even more than ten. These can be structured under a single note (blanket loan) or as individual notes submitted as one deal.

This type of financing is especially useful for investors who:

• Are refinancing multiple properties for better terms

• Want to make cash-out equity plays across a portfolio

• Are purchasing several rentals at once

• Prefer managing one monthly loan payment over many

The DSCR portfolio loan combines efficiency with scale, which is why it’s become a go-to solution for seasoned and emerging investors alike. More about these loans can be found on NQM’s Investor DSCR loan page.

Benefits of Portfolio Structuring with DSCR Loans

For brokers, offering DSCR portfolio loans delivers several key advantages:

• Consolidated Process: Instead of managing multiple loans with different timelines, a portfolio loan allows for unified underwriting, one closing, and often better terms.

• Improved Borrower Experience: Investors get one set of disclosures, one wire at closing, and fewer back-and-forths with title, escrow, and underwriting.

• Blended Risk Profiles: If one property underperforms but others have strong DSCRs, the overall portfolio may still qualify with favorable terms.

• Stronger Borrower Retention: When you help an investor close five or ten properties in one transaction, you become their go-to funding source for future growth.

Many lenders, including NQM Funding, view portfolios as more resilient than single-asset loans due to diversification, especially when the properties are located in stable markets with strong rent demand.

Eligibility Criteria for Multi-Property DSCR Loans

To successfully structure a DSCR portfolio loan, you must meet certain borrower and property requirements. These vary by lender but generally include:

• Minimum DSCR: Most lenders require 1.00x, although stronger borrowers can receive favorable pricing with DSCRs of 1.25x or more. Some may consider lower ratios with compensating factors.

• Property Types: Acceptable assets usually include:

  • Single-family rentals (SFRs)

  • Condos and townhomes

  • Duplexes, triplexes, and fourplexes

  • 5–8 unit small multifamily properties

  • Mixed-use (case-by-case)

• Borrower Type: Entities such as LLCs or corporations are preferred; personal ownership is allowed in some cases.

• Credit Score: Minimums often start at 660 but higher scores unlock better rates.

• Property Use: Must be non-owner occupied and income-producing.

Eligibility also includes experience as a landlord in many cases. While new investors may still qualify, those with 12+ months of rental history tend to receive stronger terms.

For quick eligibility confirmation, brokers can use the Quick Quote tool to screen their clients before preparing a full submission.

Loan Structuring Strategies for Multiple Properties

There are two main structures for DSCR portfolio loans:

1. Blanket Portfolio Loan: All properties are included under one loan, secured by a single mortgage instrument. This allows for one monthly payment and a simple amortization schedule. However, a default on any single property can affect the entire loan.

2. Multiple Notes Packaged as a Portfolio: Each property receives an individual loan, but they are submitted and underwritten as one transaction. This setup provides more flexibility—properties can be sold individually, and risk is compartmentalized.

Other structuring considerations include:

• Tiered Approach: Group high-performing properties separately from value-add or under-rented assets. This helps underwriters evaluate risk more clearly.

• Cash-Out vs. Purchase: Refinancing seasoned properties can unlock cash for acquiring new ones.

• Blended DSCR: Lenders may allow blending the income and debt across properties to meet a minimum DSCR.

Understanding the investor’s goals is crucial—are they flipping properties, holding for cash flow, or refinancing to scale? Aligning structure with strategy helps deals move faster through underwriting.

How to Present a Portfolio Deal as a Broker

Packaging is everything. Submitting a complete, well-organized loan file is key to closing a portfolio DSCR deal efficiently.

Key documentation includes:

• Rent Rolls: Clear documentation of rents received and lease terms

• Leases: Valid leases showing current tenants and monthly income

• Property-Level DSCR Summary: A spreadsheet showing income, PITI, and DSCR per property

• Bank Statements: Especially relevant if using a Bank Statement program for verification

• Entity Docs: LLC formation documents, EIN letter, and operating agreement

• Appraisals or Orders: Full appraisals and 1007 rent schedules per unit, unless waived

Your goal is to tell the story of the portfolio—how it performs, how it’s managed, and how it supports the requested loan amount. Submitting a strong narrative upfront saves time during underwriting.

Understanding Underwriting Nuances

DSCR portfolio loans are more complex than single-property loans, requiring additional attention to detail. Here’s what underwriters will focus on:

• Vacancy Factor: Lenders often apply a 5–10% vacancy loss to rental income.

• Reserve Requirements: Borrowers may need 3–6 months of reserves per property.

• Appraisal Type: Full interior appraisals and 1007 rent schedules are standard. For large portfolios, a sample approach may be used.

• Cash Flow History: Consistent deposits and strong rent collection help demonstrate reliability.

• Market Rents: If rents are under market, underwriters may rely on appraised rents instead of lease figures.

Working with an experienced Non QM Loan lender like NQM Funding means smoother navigation of these nuances.

LTV, DSCR, and Loan Limits for Portfolio Loans

Portfolio DSCR loans typically max out at 75–80% LTV. Factors that influence the actual LTV granted include:

• DSCR: Higher DSCR means more favorable LTV and rate

• Property Condition: Turnkey properties often qualify for max LTV, while rehab or value-add units may be capped lower

• Credit Score: Higher FICO can offset lower DSCR

• Loan Size: Portfolios exceeding $5–10M may receive tighter terms

Some lenders also cap total portfolio exposure per borrower, even across multiple loans, so it’s important to understand those limits early in the process.

How to Handle Entity and Ownership Structures

Most portfolio DSCR loans require entity ownership. Investors typically use:

• LLCs (most common)

• Series LLCs

• Corporations (C or S-Corps)

• Trusts (for estate planning)

Lenders will require:

• Articles of organization/incorporation

• EIN documentation

• Operating agreement

For foreign nationals, ownership can still be structured using an ITIN and U.S.-based entity. Learn more about eligibility at Foreign National Loans.

Geographic Diversification in DSCR Portfolios

Geographic diversification is a common investor strategy to reduce localized risk. Portfolios spread across multiple cities or states can help mitigate issues like local rent control, economic downturns, or natural disasters.

However, from a lending perspective:

• Licensing: Brokers must be licensed in all states involved

• Appraisal Coordination: Multiple appraisals must be coordinated locally

• Title Companies: Different states have different requirements

NQM Funding supports multi-state portfolios, provided documentation is complete and the properties are stabilized.

Location-Specific Considerations for Portfolio Success

In states like Florida, Georgia, Texas, and California, rental property portfolios have surged due to:

• Rapid population growth

• Booming rental demand

• Investor-friendly landlord laws

Local market rent trends directly impact DSCR calculations, making geographic knowledge crucial. Brokers working in these states should familiarize themselves with fair market rent levels, vacancy rates, and regional underwriting nuances to better position their deals.

Step-by-Step: Submitting a Portfolio Loan to NQM

1. Quick Quote: Use the Quick Quote Tool to test DSCR eligibility.

2. Prepare Docs: Rent rolls, leases, appraisals, bank statements, and entity paperwork.

3. Submit the File: Package all properties into one loan scenario.

4. Respond to Conditions: Work with NQM’s underwriters to address any questions quickly.

5. Close: Enjoy streamlined processing and fast closings from an experienced Non QM Lender.