A DSCR mortgage, also known as a Debt Service Coverage Ratio mortgage, is a type of mortgage that is based on a borrower's ability to make their monthly loan payments. The DSCR is a financial ratio that compares a borrower's net operating income to their debt obligations. It is used by lenders to determine a borrower's ability to make their mortgage payments and to evaluate the risk of the loan.

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To qualify for a DSCR mortgage, borrowers should have a DSCR of at least 1.0, which means that their net operating income is equal to or greater than their debt obligations. A DSCR of less than 1.0 may indicate that the borrower does not have sufficient income to meet their debt obligations and may be considered a higher risk to the lender. A DSCR less than 1.0 does not disqualify borrowers but may require a larger down payment.

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One advantage of a DSCR mortgage is that it allows lenders to carefully assess a borrower's financial stability and determine whether they have the ability to make their monthly mortgage payments. This can be especially helpful for borrowers who have a fluctuating income or who may have a harder time providing traditional proof of income, such as self-employed individuals or small business owners.