The Debt Service Coverage Ratio is calculated as:

DSCR = Gross Monthly Rent / Monthly Housing Expense (PITIA)

Example:
If the property rents for $2,000/month and the total payment is $1,800/month, then DSCR = 1.11.

Most lenders prefer a DSCR of 1.00 or higher, meaning the property generates enough income to cover its debt service.

This program is ideal for:

Real estate investors purchasing rental properties

Self-employed or non-traditional income borrowers

LLCs or corporations buying properties for their portfolios

Borrowers with strong assets but limited verifiable income

DSCR loans are designed for income-producing properties, not primary residences.

You can use a DSCR loan for:

Single-family homes

Townhomes or condos

2–8 unit multifamily properties

Short-term rentals (Airbnb/VRBO)

Non-warrantable condos and mixed-use properties (case by case)

Texas investors often use DSCR loans for both long-term and vacation rental properties.

Most lenders require a minimum DSCR of 1.00, meaning rent equals the property’s expenses.
However, some programs allow “no-ratio” loans (DSCR < 1.0) with higher down payments or credit scores for properties with strong appreciation potential.

Down payment requirements vary by scenario:

20% for standard investor properties

25–30% for short-term rentals, condos, or higher loan amounts

30%+ for DSCR below 1.0 or cash-out refinances

Most programs require a minimum FICO of 620–640, though 680+ usually qualifies for better pricing and lower down payments.
Investors with strong assets or high DSCR ratios can sometimes qualify with lower scores.

Only rental income from the property is considered—either:

A current lease agreement,

A market rent estimate from the appraiser’s 1007 Rent Schedule, or
Short-Term Rental (STR) Income from platforms like AirDNA or rental statements.

You don’t need to document personal income, tax returns, or employment history.

Yes. DSCR loans are investor-focused, and most lenders allow you to title and close under an LLC or corporation.
You’ll typically sign a personal guarantee as the managing member, but ownership remains with the entity.

Loan amounts from $100,000 to $5 million+

30-year fixed or ARM options (5/6, 7/6, or 10/6)

Interest-only and no-prepay penalty options available with select lenders

Cash-out refinances up to 75% LTV (varies by DSCR and property type)

Loan amounts from $100,000 to $5 million+

30-year fixed or ARM options (5/6, 7/6, or 10/6)

Interest-only and no-prepay penalty options available with select lenders

Cash-out refinances up to 75% LTV (varies by DSCR and property type)

No. No PMI is required, even with less than 20% down.
Rates are slightly higher than conventional investor loans, but the tradeoff is full income flexibility.

Yes, if the property is newly purchased or recently renovated, the appraiser’s market rent analysis (Form 1007) determines qualifying income until a lease is in place.
Some lenders require 3–6 months of rent history for cash-out refinances.
For Short-Term Rentals (STRs) a new STR purchase with no retal history, lenders can use projected income data from third-party reports like AirDNA.

Yes. Many Texas lenders allow short-term rental income to qualify if:

The property is in a permitted area

There’s a track record of bookings or a rental projection report from a third-party source like AirDNA

This is especially popular in Dallas, Austin, Fredericksburg, and Galveston.

Absolutely. DSCR refinances are commonly used to:

Cash out equity for additional property purchases

Lower rates on existing rental loans

Simplify qualification by removing personal income requirements

No personal income or tax returns required

Qualify based solely on rental income

Available to LLCs and corporations

No PMI

Cash-out options for expanding portfolios

Ideal for short- or long-term rentals

Slightly higher interest rates than traditional investor loans

Larger down payments for lower DSCR or short-term rentals

Limited to investment properties only

May include prepayment penalties on shorter-term loans