You ran the ratio and it missed. The rent does not cover the payment, or it covers it thinly enough that 0.75x is out of reach once you put real insurance and real association dues in the denominator.
It is a good property in a good location and the numbers say no.
There is a third column on the grid that most investors have never been shown.
What No Ratio actually is
From CMG Financial's Non-QM Sharp Series guidelines (NMLS #1820, revised 09/21/2026), the Sharp DSCR program states that DSCR is eligible at .75x, and separately that No Ratio DSCR is acceptable with restrictions.
No Ratio means the coverage calculation is not the qualifying test. The property does not have to cover its payment. You are qualified on the asset, the leverage and your credit rather than on the ratio.
No personal income is used. That does not change.
What it costs
Leverage, and it is a real cost. Here is the grid across the three coverage columns, on purchases and rate and term refinances, at the top score tier:
At a 740 score:
- DSCR 1.00x or better: 80% to $1,000,000, 75% to $1,500,000, 75% to $2,000,000, 70% to $2,500,000, 65% to $3,000,000
- DSCR 0.75x or better: 75% to $1,000,000, 70% to $1,500,000, 65% to $2,000,000
- No Ratio: 75% to $1,000,000, 70% to $1,500,000, 65% to $2,000,000
On cash-out at 740: 75% at 1.00x to $1,000,000, 70% at 0.75x, and 65% on No Ratio.
At a 720 score, No Ratio drops to 70% to $1,000,000 and 65% to $1,500,000, with 60% on cash-out.
At 700 and 680, No Ratio runs 65% at the low end with 60% on cash-out.
At 660, No Ratio is 60% across the board.
So No Ratio at a strong score sits roughly where 0.75x coverage sits, and it falls away faster as score drops. The score matters more on this column than on any other.
The restriction that matters most
Interest only is not permissible on No Ratio.
Interest only is eligible elsewhere as a 10/20 or 10/30 fixed structure with a 700 minimum score, to 75% leverage at 1.00x coverage and 70% at 0.75x. On No Ratio it is off the table entirely.
That is worth pausing on, because it removes the obvious workaround. An investor whose ratio misses might reasonably think: use interest only, which calculates on ITIA instead of PITIA, and the coverage improves. That works to get you from 0.75x to 1.00x. It does not work to rescue a No Ratio file, because the two cannot be combined.
So the sequence is: try interest only to improve coverage into a ratio column first. Only if that still misses does No Ratio become the answer, and then you are on a fully amortizing loan at lower leverage.
When No Ratio is genuinely the right call
An appreciation play in a strong submarket. Some properties are bought for what they will be worth, not what they yield today. If you are underwriting appreciation and you have the cash flow elsewhere to carry a shortfall, the ratio is a lender's constraint rather than a description of your strategy.
A property mid-repositioning. Under-rented, below-market leases in place, or a unit that will command materially more after work. The current rent does not describe the stabilized property.
Heavy association dues. A Scottsdale condominium with strong rent and substantial dues can fail coverage on a line item that has nothing to do with the property's desirability. Note that vacant properties are not eligible for refinance except where vacancy is due to recent renovation with appraiser confirmation and visual evidence.
A second home you also rent. Occasionally the rent is real but seasonal and does not support the full payment on an annualized basis.
When to pass instead
Be honest about the difference between a property that is temporarily under-earning and one that simply does not work.
If the rent will not cover the payment now and there is no plan that changes that, you are funding a monthly shortfall out of other income for as long as you hold it. That is a legitimate decision if you have made it deliberately, with a number attached, and it is a bad one if you drifted into it because a lender said yes.
Ask yourself: what is the monthly shortfall, how long do I carry it, and what has to be true for that to have been worth it? If the answer is "the property appreciates," say what rate of appreciation makes it work and whether you believe it.
The larger down payment No Ratio requires also reduces the shortfall, since a smaller loan means a smaller payment. That is not a coincidence. The structure is designed so that you are buying coverage with equity.
Everything else still applies
No Ratio does not relax the rest of the program:
- Payment history 0x30x12 and three or more years of housing event seasoning
- Housing history verified on the subject property and your primary residence, regardless of whether you are on the note or vested on title
- Professional investor requirement: twelve months of experience owning or managing income-producing real estate within the most recent thirty-six months, with a letter of explanation detailing it
- First-time investors require DSCR greater than 1.0, a score greater than 700 and no exceptions on the file, which by definition excludes No Ratio
- Rent loss insurance equal to at least six months of local average monthly rents
- Personal recourse required, with a Personal Guaranty Agreement
- Reserves by loan size: three months to $500,000, six months to $2,000,000, nine months above that
- Declining markets: 5% loan-to-value reduction
Note the first-time investor point specifically. If this is your first income property, No Ratio is not available to you, because the first-time investor exception requires coverage above 1.0x.
The decision, in order
- Run the real ratio with real insurance including rent loss coverage and real association dues.
- If it misses 0.75x, price interest only and see whether coverage clears with ITIA in the denominator.
- If it still misses, price No Ratio at your score and loan size and find the leverage.
- Calculate the monthly shortfall at that larger down payment.
- Decide whether the strategy justifies carrying it, with a number and a time horizon attached.
Common questions
What is a No Ratio DSCR loan? A DSCR structure where the coverage calculation is not the qualifying test. The property does not have to cover its payment. No personal income is used either.
How much leverage can I get on No Ratio? At a 740 score, 75% to $1,000,000, 70% to $1,500,000 and 65% to $2,000,000 on purchases and rate and term refinances, with 65% on cash-out. Leverage falls with score, down to 60% across the board at 660.
Can I use interest only on a No Ratio loan? No. Interest only is not permissible on No Ratio, which removes the most obvious way to improve a thin file.
Can a first-time investor use No Ratio? No. The first-time investor exception requires a DSCR greater than 1.0, a score above 700 and no exceptions on the file.
Is No Ratio a bad idea? It is a structure, not a verdict. It works when the property is under-earning temporarily or being bought for appreciation and you have priced the monthly shortfall deliberately. It is a poor idea when you drift into it because a lender approved you.
Related reading
- DSCR and investor property loans, the full index for this topic
- How to Calculate DSCR Yourself Before You Write the Offer
- DSCR Loan FAQ: The Questions Investors Ask Before Their First One
- DSCR or Conventional Investment Financing: Which One Your Fifth Property Needs
Why bring this file to us
- We price No Ratio against the alternatives. A missed ratio is a structure problem, not always a dead deal.
- We tell you the real cost, which is leverage and the loss of interest only, so the decision is made with both numbers visible.
- We are honest about when to pass. A property that cannot cover its payment has to earn its keep another way, and sometimes it does not.
- Broker model. Multiple investors rather than one bank's shelf, which is what a file like this needs when the first answer is no.
- You talk to the principal. Ricky Khamis is President of EPiQ Lending and a Certified Mortgage Planner, NMLS #173141, originating mortgages since 1999. Direct line: (480) 999-9842.
EPiQ Lending is NMLS #1936984, at 7975 N. Hayden Road, Suite A-101 in Scottsdale. Verify all of it before you trust any of it: Ricky's EPiQ Lending profile, the Scottsdale branch, and the license itself at NMLS Consumer Access. Hold every lender to that standard, including us.
If the ratio misses, do not walk away before we price No Ratio against it. The deal frequently survives with a larger down payment.
Program figures in this post come from the CMG Financial (NMLS #1820) guideline set named above, as published on the revision date given. CMG Financial is the parent company of EPiQ Lending. These figures describe one investor's program at one point in time. Other investors price and underwrite the same borrower differently, guidelines change without notice, and nothing here is an offer of any specific program or terms. Confirm current eligibility on your own file before you plan around any of it.
Equal Housing Opportunity. This is general information, not a commitment to lend or an offer to extend credit. Rates, terms, and program guidelines change and depend on credit approval, property appraisal, income and asset verification, and other qualifying factors. Not all applicants will qualify. Non-QM, asset-based and business purpose financing carry different pricing, terms and consumer protections than agency financing. Consult your tax advisor regarding the tax treatment of any income or distribution strategy.
Run the coverage ratio before you write the offer
DSCR files are decided by the rent against the payment. Send the address and the rent and I will tell you where the ratio lands before you are committed.
