⏱️ Interest-Only DSCR Loans
Maximize monthly cash flow now. Pay down principal when you choose to.
An interest-only DSCR loan skips principal for an initial period — commonly 10 years — then converts to a fully amortizing payment. The lower payment can lift a borderline deal’s coverage ratio and frees up cash flow for reserves or the next acquisition. It is not for everyone: the balance doesn’t shrink during the IO period, so your equity growth depends on appreciation and the rent you bank.
Is this you?
Interest-only DSCR tend to fit…
- Cash-flow-first investors who’d rather deploy capital than pay down principal
- Deals where an amortizing payment would push the DSCR under 1.00
- Investors planning to sell or refinance within the IO period
- Portfolio builders stacking reserves for the next property
- Owners in appreciating markets comfortable with a slower paydown
Questions investors actually ask
Interest-only DSCR: straight answers
What is an interest-only DSCR loan?
A DSCR investor loan where, for an initial period (often 10 years), your monthly payment covers interest only. After the IO period, the loan converts to a fully amortizing payment for the remaining term. The property still qualifies on its rent-to-payment ratio.
Does interest-only improve my DSCR ratio?
On some programs, yes — the ratio is calculated using the lower interest-only payment, which can lift a borderline deal above 1.00. Other programs qualify on the fully amortizing payment regardless. Tiaira will tell you which rule your program uses before you count on it.
What happens when the interest-only period ends?
Your payment steps up to a fully amortizing amount over the remaining term, which is noticeably higher. Most investors plan to refinance, sell, or have grown the rent enough to absorb it. Build that into your model from day one.
Is the rate higher on interest-only?
Typically a bit higher than an equivalent amortizing DSCR loan, since the lender carries principal risk longer. Whether the cash-flow benefit outweighs it depends on your plan for the property.
Can I pay principal during the IO period?
Usually yes — most IO loans allow optional principal payments, which recalculate the interest-only payment downward. Confirm the prepayment-penalty terms first, since DSCR loans often carry one.
Keep exploring
Conventional investor loans
The agency route: full income docs, often a lower rate than DSCR, and up to 10 financed properties.
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Live in one unit, rent the rest. Low down payment because it’s your home — and the rent helps you qualify.
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Qualify on the property’s rent instead of your tax returns. The investor loan this whole site is built around.
Learn more →Not sure if interest-only dscr fit your deal?
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