Can I Get a DSCR Loan in the UK for Owner Occupancy?


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can i get dscr for owner occupancy

A DSCR (Debt Service Coverage Ratio) loan is a type of mortgage designed for real estate investors. With a DSCR loan, the lender looks at the property’s expected rental income rather than the borrower’s income to determine eligibility.

How does a lender calculate DSCR?

To calculate DSCR, the lender divides the property’s annual net operating income by its annual debt obligations. For example, if a property generates £60,000 in rental income per year and has a £48,000 annual mortgage payment, the DSCR would be 1.25 (£60,000/£48,000 = 1.25).

Lenders typically want to see a minimum DSCR of 1.20 or higher to approve a loan. A higher ratio indicates there is sufficient rental income to cover the mortgage payments and other expenses.

Are DSCR loans available for owner-occupied properties in the UK?

In most cases, DSCR loans are intended for investment properties that generate rental income, not primary residences. This is because the lender depends on the rent rolls to repay the loan.

However, some lenders may offer DSCR loans for owner-occupied properties on a case-by-case basis. Here are a few scenarios where this could apply:

Purchasing a multi-family property and living in one unit

If you purchase a duplex, triplex, or fourplex and plan to occupy one unit while renting the others, a lender may approve a DSCR loan. The rental income from the other units helps offset the mortgage.

Using a separate rental property to qualify

Some lenders allow borrowers to use the income from another investment property they already own to qualify for a DSCR loan. So even if the new property is owner-occupied, the other rental property provides the needed income documentation.

Providing lease agreements for future tenants

In some cases, a lender may accept signed lease agreements for units you intend to rent in an owner-occupied property after purchase. The projected rental income can act as a substitute for actual rent rolls.

How can I get a DSCR loan for an owner-occupied property?

Getting a DSCR loan approved for an owner-occupied home can be challenging but is possible in certain situations. Here are some tips:

  • Contact lenders that specialize in non-conforming and alternative loans, such as private or hard money lenders.
  • Be prepared to provide extensive documentation to prove future rental income potential. Signed leases, market rent comparisons, and a solid business plan are key.
  • Consider using a mortgage broker familiar with DSCR loans. They can shop around to find a willing lender.
  • Make a large down payment of 25-30% or more to increase your chances of approval.
  • Purchase a multi-unit property so that rental income from the other units helps offset the mortgage.

The bottom line is that DSCR loans are primarily intended for investment properties, not primary residences. But with the right lender, documentation, and creative approach, getting approved for owner occupancy is possible in the UK. Speaking to an experienced broker or lender is the best way to assess your options.


Hello! My name is Luna, and I am a freelancer in the finance niche. I have a passion for helping people understand their financial options and make informed decisions about their money. My website, DSCR Loan UK, serves as a resource for those looking for information on loans, budgeting, saving, investing, and more. I strive to provide practical and easy-to-understand advice that can help people make smart financial decisions.