What is a DSCR Loan?
A DSCR (Debt Service Coverage Ratio) loan is designed for real estate investors seeking to finance rental properties without relying on personal income documentation. Instead, this loan type uses the income potential of the property to qualify. This is a valuable option for investors focusing on cash-flowing properties in Florida where real estate is a promising market for both short- and long-term rentals.
How Do DSCR Loans Work?
Let's go through it with a simple explanation:
Step 1: The Underwriter & loan originator reviews the property's rental income from the lease agreement and the appraisal.
Step 2: We calculate your maximum loan amount allowed based on the loan program's minimum DSCR or our special "No Ratio" DSCR products.
Step 3: You receive a loan offer based on the calculated DSCR from junior underwriter and confirmed by the loan originator.
Your Path to Loan Approval
The income verification process for Florida DSCR loans usually involves:
– 1. Review of the lease agreement, appraisal report, and appraiser's determination of market rents
– 2. Calculation of DSCR is predicated on the agreed rents and qualifying mortgage P.I.T.I.
– 3. Review of your housing history to confirm no mortgage late payments in the last 2 years
– 4. Confirmation of the investor's insurance coverage is sufficient to the lender
– 5. It is highly recommended you take title in the name of an LLC, as most lenders with the best DSCR interest rates require this before closing.
DSCR loans are approved based on the property’s income generation potential. The lender calculates the DSCR by dividing the property’s net operating income by the total debt service (principal and interest payments).
A DSCR above 1.0 indicates that the property generates enough income to cover the loan payment. Typically, lenders require a minimum DSCR of 1.25 to make certain that the rental income can comfortably cover monthly mortgage costs.
3 Acceptable DSCR Loan Programs
- DSCR - 1.25 - Preferred by most lenders and offers the best rates
- DSCR - 1.00-1.24 - Accepted by most lenders.
- DSCR - 0.75 - 0.99 - Few DSCR lenders offer a DSCR less than 1 product but we do with our wholesale partners. The LTV is limited to 65-70 due to higher risk and minimum FICO score requirements.
Features of DSCR Loans
- No personal income documentation required
- Loan approval based on rental income actual or projection if vacant
- Available for single-family, condos and multi-family properties
- Flexible loan terms and competitive rates
- Ideal for real estate investors focused on income properties

Best Florida Cities for Rental Property Investments
Florida offers excellent opportunities for rental investments due to strong tourism and favorable property appreciation rates. Here are some popular cities for real estate investors:
City | Rental Demand | Average Rental Income |
---|---|---|
Orlando | High (tourist-friendly) | $2,200 |
Tampa | High (business-friendly) | $2,300 |
Miami | High (popular short-term rentals) | $2,500 |
Jacksonville | Moderate | $1,800 |
Florida Cities with No Rent Control Restrictions
Florida state law generally prohibits rent control under Florida statute § 125.0103, allowing landlords flexibility in rental pricing. Here are some cities that support investor-friendly rental policies:
- Orlando
- Tampa
- Miami
- St. Petersburg
Local Success Stories
1: Sean is a Palm Harbor resident and investor who used a DSCR loan to acquire a multi-family property generating an 8% annual ROI. With rental income meeting the lender’s DSCR requirements he secured funding quickly and is now netting $3,000 in monthly cash flow.
2: Armando is a Miami-based investor who qualified for a DSCR loan without using his W-2 income. His property’s rental income covered the mortgage by 1.5x and he expanded his portfolio without impacting his personal finances.
Popular investor questions and answers
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Can I qualify for a DSCR loan in Florida if my credit score is average but the property has strong rental income?
Many DSCR loan programs are more flexible with credit scores than traditional loans, especially if the property demonstrates strong rental income. While a higher credit score (usually 620 or above) may qualify you for better terms, lenders are primarily focused on whether the property’s income sufficiently covers the loan payments. This makes DSCR loans accessible for investors with moderate credit scores as long as the property’s cash flow is solid.
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Do you allow short term rents from AirBnb or VRBO on a DSCR loan?
Yes. We ask the appraiser to determine the short term rents along with reviewing the information on AirDNA and/or 12 months of short-term rental income receipts from a trusted STR platform.
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Are DSCR loan terms and rates different for single-family vs. multi-family properties in Florida?
Loan terms and interest rates may vary depending on the property type and lender. Typically, multi-family properties may have slightly stricter DSCR requirements and higher interest rates due to higher potential vacancy rates and maintenance costs. However, both single-family and multi-family properties are eligible for DSCR loans in Florida and experienced investors with well-performing properties may still receive competitive terms.
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What upfront costs should I expect with a DSCR loan for a property in Florida?
Typical upfront costs include an appraisal fee, credit report. The closing costs and loan origination fees, which can range from 1-3% of the loan amount, are due at closing. An appraisal is critical for DSCR loans because it determines the property’s local rental market influencing the DSCR calculation. Investors should budget for these fees to avoid any surprises during closing.
Disclosure: Minimum loan amount is $200,000 for residential loans. Loan programs are subject to change per lender at any time until the loan is approved and the rate is locked. Borrowers must be approved by underwriting. Not all applicants will qualify.