The headline numbers look like a bull market. Debt-service coverage ratio (DSCR) loan volume grew more than 50% year over year in 2024, surpassing bank statement loans to become the largest share of non-qualified mortgage production. By late in the year, DSCR was the belle of the ball.
But before anyone calls this a growth story, it is worth looking at what is driving it.
Some of the surge reflects healthy, intentional portfolio building. But a significant share of the volume is driven by investors who are not choosing DSCR so much as being pushed toward it by a fix-and-flip market that no longer assures a clean exit.
Exit math changed
The fix-and-flip business ran for years on a simple formula. Buy distressed properties, add va...
