DSCR ADU Loan Calculator
DSCR (Debt Service Coverage Ratio) loans let investors qualify based on projected rental income from the ADU rather than personal income or tax returns. Rates run 1.0–1.5% above a conventional HELOC but approval is fast and the underwriting is property-focused. Compare the payment side-by-side below.
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Loan amount: $200,000
DSCR Loan
Qualifies on projected rent
Investor-focused. No personal income docs required.
HELOC
Variable rate, interest-only draw option
Flexible line of credit. Only pay interest on what you draw.
Construction-Perm
Draws during build, converts to mortgage
Funds disbursed by milestone. Permanent loan activates at completion.
Rent-coverage estimate
Typical ADU rent in the National region runs about $1,800/mo. That covers roughly 102% of the featured DSCR Loan monthly payment shown above.
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ADU loan product comparison
| Product | Typical rate | Term | Best for |
|---|---|---|---|
| HELOC | 7.5–10.5% variable | 10 draw + 20 repay | Homeowners with 20%+ equity who want flexibility |
| Home Equity Loan | 7.3–10.3% fixed | 10–30 yr | Borrowers who want a fixed monthly payment |
| Cash-Out Refi | 7.5–8.5% fixed | 30 yr | Current mortgage rate already near market |
| Construction-Perm | 8.0–12.0% | 12–18 mo then 30 yr | Ground-up builds over $200K |
| DSCR | 8.5–12.0% | 30 yr | Investors qualifying on rent |
| RenoFi | 8.0–11.0% | 10–20 yr | Limited current equity, new-build ADUs |
Frequently asked questions
What is a DSCR loan ADU loan?
A DSCR loan is a financing product structured specifically around the cash-flow and appraisal profile of an ADU build. The calculator above shows how its monthly payment, rate, and term compare to a standard HELOC on the same build cost.
Who should use a DSCR loan for their ADU?
Borrowers pick a DSCR loan when its structure (draw schedule, rate lock, qualification basis, or post-construction appraisal) lines up with their project. Compare the payment side-by-side against a HELOC and cash-out refi to confirm it is actually the cheapest path.
What credit and equity do I need for a DSCR loan?
Most ADU-specific loan products require a 680+ FICO and leave 15–20% home equity after the draw. DSCR loans are the exception — they qualify against projected ADU rent instead of personal income but tend to price 1.0–1.5% higher than a conventional HELOC.
Can I combine a DSCR loan with a HELOC?
Sometimes. Stacking products is legal but requires explicit lender approval on both sides. Many homeowners instead use a HELOC for the first phase (plans, permits, site prep) and refinance into a single long-term product once the ADU is complete and appraised.
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