LOAN PROGRAM · TEXAS
DSCR loans for investors.
The property qualifies, not your W-2.
Traditional mortgages cap how many rentals you can own based on your personal income and existing debt. DSCR loans don't. DSCR — Debt Service Coverage Ratio — qualifies the deal entirely off the property itself: does the rent cover the mortgage? If yes, the loan can close. Your tax returns, W-2s, and personal DTI never enter the math.
How DSCR is calculated
DSCR = monthly gross rent ÷ monthly PITI (principal, interest, taxes, insurance). A property renting for $2,500 with a $2,000 PITI has a DSCR of 1.25 — rent covers 125% of the mortgage cost. The ratio is based on the appraiser's market rent estimate, not just the current lease.
- DSCR below 1.0 — possible at some lenders with 25–30% down plus reserves
- DSCR 1.0–1.25 — the most common tier, typical rates at 20–25% down
- DSCR 1.25+ — best rates and the lowest down payment options
What it works for
Single-family rentals, 2–4 unit properties, most condos, and short-term rentals. LLC title is allowed, which keeps the property separate from your personal assets — a major reason investors choose DSCR even when they could qualify conventionally.
For short-term rentals, Texas lenders take two approaches: a conservative long-term rent comp, or an STR market analysis using twelve months of actual income or market data. Which method your lender uses significantly changes what you qualify for — Houston, Austin, San Antonio, and Galveston all have STR-friendly programs, and we confirm the method before you write an offer.
The two investors we see most
The portfolio builder: owns two or three properties on Conventional loans, hits Fannie's financed-property cap or the DTI ceiling, and switches to DSCR for the next five to ten. The first-time investor: a W-2 earner with strong income who buys the first rental on DSCR to keep Conventional capacity intact for their own home.
Costs and pitfalls
DSCR rates run roughly 0.75–1.5% above Conventional, with typical closing costs of 2–3% of the loan. Plan for six months of PITI in liquid reserves on top of down payment and closing costs — underestimating reserves is the most common surprise.
And be careful stretching DSCR with aggressive short-term-rental projections: a 1.4 DSCR built on peak Airbnb numbers can become 0.9 in a slow year. We underwrite conservatively even when a lender would let you stretch.
Want the deep dive? Read the full DSCR loan guide.
FAQ
Common questions.
- Do DSCR lenders look at my personal income?
- No. Qualification is based on the property's rental income against its PITI. Your W-2s, tax returns, and personal DTI don't enter the calculation.
- Can I close in an LLC?
- Yes — LLC vesting is allowed on DSCR loans, keeping the property separate from your personal assets.
- What DSCR ratio do I need?
- Most lenders want at least 1.0 (rent exactly covers PITI). A ratio of 1.25 or higher unlocks better rates and lower down payment options, and sub-1.0 deals are possible at some lenders with 25–30% down.
- Do short-term rentals (Airbnb/VRBO) qualify?
- Yes, at STR-friendly lenders — active in Houston, Austin, San Antonio, and Galveston. The lender either comps the property at long-term market rent or analyzes actual short-term income; the method materially changes what you qualify for.
- Can ITIN investors use DSCR?
- Most DSCR lenders accept ITIN borrowers with U.S.-based credit. It's one of the most accessible investor products for borrowers without an SSN.
See what you qualify for.
Three minutes, no credit pull, no commitment. We respond the same business day — in English or Korean.