Previously known for manufacturing and agriculture, Michigan is a state on the up and up, reinventing itself as a relaxing Midwestern vacation destination. Its rich cultural history and beautiful, well-curated parks make it a popular destination for tourists from major cities like Chicago who want to escape it all and breathe in Pure Michigan for a day or two. In addition, it's caught the attention of the federal government and local investors who hold high hopes for its future.

Wise real estate investors have begun building inroads into the Midwestern market - and many are doing so through Michigan DSCR loans. Unlike a conventional loan, a DSCR loan focuses almost entirely on the property's cash flow, doing away with the need to examine the borrower's personal finances; all that's necessary is the borrower's credit score, a down payment, and proof that the property's monthly rental income exceeds the monthly mortgage payment.

Visio Lending, a national leader in DSCR loans, has a well-established DSCR loan program in Michigan that allows real estate investors to join the rebirth of this Midwestern manufacturing powerhouse.




Why Are DSCR Loans So Valuable for Real Estate Investment?

Property investors have found great success in DSCR loans for a straightforward reason: they provide a far more streamlined process than conventional loans, which require extensive research into a borrower's financial details. For DSCR loans, the borrower's creditworthiness and the property's net operating income are all that matters.

A No Tax Return Loan is Great for Investment Property

When it comes to real estate investment loans, the primary focus should be on how your rental properties perform in the real estate market, and DSCR loans recognize this. The buyer's income has no bearing on approval, only the property's ability to satisfy the debt service.

This makes DSCR loans an excellent choice for buying investment properties, particularly with borrowers whose employment history or debt-to-income ratio may disqualify them from conventional loans.

Debt Service Coverage Ratio Loans Allow You to Borrow Under a Corporate Entity

Another crucial reason why real estate investors prefer DSCR loans is that, unlike traditional loans, they can be signed under a corporate entity rather than their own name. This is vital in commercial real estate because should there be an issue with the investor's rental properties, their personal finances will not be impacted.

Long-Term Financing Allows You to Buy and Hold

DSCR loans have long repayment periods and prepayment penalties at the onset of the loan; this makes them great for a real estate investor who is planning to hold on to their investment property for the long term. A shorter term means higher loan payments, which can significantly suppress an investor's monthly rental income, making it easier to meet their investment goals.

With a DSCR loan, you have up to 30 years to pay it off, encouraging you to choose more subdued markets with great potential - such as those in Michigan.


Benefits of Investing with DSCR Loans in Michigan

A DSCR loan in Michigan offers you access to a promising market on the up and up; Michigan has been ranked the #1 economy in the 37 states with a population of over 2 million. Seven of its ten largest corporations are the top in their respective fields, and manufacturing is experiencing explosive growth all across the state, surging over 25% from 2019 onward.

What's more, it has miraculously bounced back from the pandemic: whereas there was over 23% unemployment during the pandemic, it has now returned to under 6%.

There's also been incredible interest from the local and federal government in revitalizing Michigan, recognizing its great potential. Federal funding has afforded over 200,000 Michiganders access to high-speed internet, which will help many locals build their own businesses and access higher education.

Both the public and private sectors have committed to boosting Michigan's manufacturing industry; given that this is one of the historic hubs for the automobile industry, it simply makes sense that Ford Motors is building a brand new electric vehicle plant in Marshall, Michigan, to bring jobs to the area. In addition, the federal government has committed to helping improve the state's transportation infrastructure, which will also attract new businesses.

Despite all these fantastic developments, housing is incredibly affordable at an average home price of just $214,231, well below the national average. Buying rental properties here is both highly lucrative and very cost-effective for real estate investors, and a DSCR loan will help you quickly join this bullish real estate market.

It's clear that Michigan is a rising star in the US economy, and DSCR loans can help you be part of this meteoric success.



Michigan DSCR Eligibility Requirements

The DSCR loan process is quite simple compared to a conventional mortgage, as DSCR lenders focus primarily on the property's monthly rental income compared to the debt service. This is called the debt service coverage ratio: divide the rental income by PITIA (principal, interest, taxes, insurance, and association fees), and you have a ratio that indicates whether rental properties have positive or negative cash flow.

Credit Score

The minimum credit score for a Michigan DSCR loan is relatively low, at between 620 to 640; this makes it far easier for real estate investors to break into the rental market here, as other states require scores of 680 or more. Visio Lending has a minimum requirement of 680. Your credit score determines the interest rates you can access; the interest rate for a DSCR loan is often 1% to 2% more than traditional loans.

Minimum DSCR Ratio Requirement

How does a DSCR loan work? It's simple: you divide the rental income by the mortgage payment. Calculating DSCR is the most crucial component of this type of real estate loan, and you should strive for a score of 1.0 at the very least.

Most lenders want an even stronger profile of 1.2, so you should consider boosting rental income by raising prices to the market rent and offering enticements like waiving pet fees.

Appraisal and Rent Schedule

You will need to appraise the property and submit a rent schedule to prove that it is making sufficient rental income. If your property has previous tenants, you should also show documentation like lease agreements to demonstrate its successful income generation history.

Loan-to-Value Ratio

The loan-to-value ratio refers to the size of your DSCR loan compared to the purchase price. Most DSCR lenders want an LTV of no more than 80%, with many seeking 75% or less. This directly impacts your down payment, so it's crucial to understand what lenders expect from you upfront.

DSCR Loan Down Payment Requirements

In proportion to your LTV, you'll need to provide a minimum down payment of at least 20%. You'll also need to pay origination fees like closing costs.

Prepayment Penalties

Unlike traditional loans, you'll need to pay a percentage of the principal if you pay off your DSCR loan ahead of time, usually on a decreasing schedule in relation to the loan's seasoning.


Best Places to Buy Investment Property with a DSCR Loan in Michigan

Beautiful Michigan is full of excellent markets, each with its own unique strengths, but these are the five hottest markets based on economic growth, earning potential, and demographics. While many investors choose to pour money into more prominent cities like Dearborn or Detroit, there's great potential in the medium-sized towns that make up Michigan's heartland.


📍 Grand Rapids

The Grand Rapids economy is expected to grow twice the national average, meaning that real estate investors should jump in before this city takes off. Currently, the average rental income is $1,550 for residential properties, while commercial properties make about $18.33 per square foot.


📍 Ann Arbor

Ann Arbor is a college town, meaning it needs plenty of rental property for students and retail shops to satiate culture-hungry youth. Rents are much higher here at $2,250, and a commercial property's monthly rental income is around $25.99 per square foot.

📍 Macomb Township

Lush with untapped potential, Macomb Township is an outdoor paradise with lots of recreational activities for tourists; this means short-term rentals are often more lucrative than longer terms. It has some of the lowest rent in the state at just $1,122 per month, while commercial rental income is a bit higher at $22.86 per square foot. In comparison, vacation rentals make, on average, about $140 a night.


The largest municipality on Cape Cod, Barnstable, is home to breathtaking scenery, diverse wildlife, and a friendly downtown. Vacationers flock to the region to enjoy its art galleries, small shops, and excellent food scene, ensuring steady tourist income throughout the summer.

Residential rental property provides about $3,000 per month; commercial spaces are sparse here, but they average about $20 per square foot.

📍 Traverse City

Traverse City is a winter wonderland popular with tourists, but it also has a very high rental population of almost 40%, making it great for real estate investments. Its rental income is slightly lower than Ann Arbor's at only $2,100. On the commercial rental real estate side, office space makes more than retail: $22.33 per square foot versus $17.52 per square foot, respectively.

📍 Kalamazoo

Another college town, Kalamazoo is known for its laid-back culture, home to both Kalamazoo College and Western Michigan University. Rents are quite low at $1,200 per month across all property types, but this may rise soon: tourism has taken off here, with spending up almost 40% since 2020. Like Traverse City, its strength lies mainly in office buildings, which make $23.08 per square foot; retail spaces make only $17.29 per square foot.



Closed DSCR Loans Michigan

Check out some of Visio Lending's recently closed DSCR loans in Michigan.




  Erie, MI

  • $141,000 Loan Amount
  • Cash-Out Refinance
  • STR 
  • DSCR: 4.36


  Grand Rapids, MI

  • $120,000 Loan Amount
  • Cash-Out Refinance
  • LTR
  • DSCR: 1.93


  Lansing, MI

  • $153,000 Loan Amount
  • Cash-Out Refinance
  • LTR
  • DSCR: 1.284

Frequently Asked Questions

Because the property's ability to generate sufficient cash flow is the most significant element of a DSCR loan, the borrower's credit score is all that matters. We understand that investors may be denied loans despite having the necessary qualifications, which is why we've made it simple to access the funds you need to invest in the real estate market, focusing only on that which matters most when it comes to investments: the rental income from the subject property.




The maximum loan is $5 million, which is much higher than those for conventional mortgages. As the maximum loan-to-value ratio is 20%, this means you can expect to need a down payment of $1 million for a loan of that size.

Generally, a DSCR loan is a 30-year fixed mortgage, though some lenders will also have 15-year and 20-year terms. You may also choose loans with variable interest rates, though these are rare.

Given that nearly every DSCR loan will have a prepayment period to protect the lender's interests, most real estate investors will elect a 30-year mortgage, knowing they can pay sooner after five years. This also lowers your monthly payments to help you build a strong cash flow.

In this instance, you should consider earning more rental income by raising rent, offering better amenities, or pursuing a different loan type, such as an asset-backed loan. An asset-backed loan allows you to use your real estate portfolio as capital to secure more funding, which can be advantageous for real estate investors who already have properties.

Most lenders will support a wide variety of commercial investments, including:

  • Retail storefronts
  • Restaurants
  • Hotels
  • Short-term rentals
  • Long-term rentals
  • Manufacturing facilities
However, rural properties are generally not permitted. As DSCR loans are only meant for investments, owner-occupied properties are not eligible for this loan type, and should instead be funded through traditional loans.

Michigan map

Our DSCR Loans in Michigan have:

  • · Full 30 year terms, no balloons for rental residential properties

  • · The ability to finance in an LLC

  • · No tax documents or personal income verification

  • · Real estate investor-friendly loan programs

  • · Interest only loan options


Contact Us to Start Your Loan