DSCR Loans for Texas Real Estate Investors
Buy or refinance a Texas rental property using the property’s rental income to qualify, not your tax returns or W-2s. Single-family homes, 2-4 units, condos and short-term rentals.
Why investors use DSCR loans
No personal income docs
No pay stubs, tax returns or employment verification. The property’s rent does the qualifying.
Built for portfolios
Self-employed investors and landlords adding doors can qualify without write-offs working against them.
LLC friendly
Hold title in an eligible business entity such as an LLC.
Short-term rentals
Airbnb and VRBO income can count toward qualifying.
How DSCR is calculated
DSCR = gross monthly rent ÷ proposed monthly payment (principal, interest, property taxes, insurance and HOA dues).
If rent equals the payment, the DSCR is 1.00. If rent is 20 percent higher, it is 1.20. If rent is 10 percent lower, it is 0.90. A ratio of 1.00 or higher gives you the most options. Lower ratios can still qualify on many property types with a higher credit score and more equity. Long-term rent comes from a lease or the appraiser’s market rent schedule. For short-term rentals, a portion of gross rent is set aside for operating costs.
Buying a Texas rental property
Use a DSCR purchase loan to buy a single-family rental, a duplex through fourplex, a condo or a short-term rental anywhere in Texas. On a purchase with no rental history, the appraiser’s market rent or, for short-term rentals, a projected rental estimate can be used to qualify. Gift funds are allowed.
First-time investors can qualify too, with a DSCR of at least 1.00, a higher credit score and a lower loan limit. Short-term rentals are not available to first-time buyers.
Refinancing or cashing out a Texas rental
Refinance an investment property to lower your payment, move off a short-term loan, or take cash out to fund your next purchase or repairs. Cash-out amounts depend on your equity and credit score. This program is for investment property only. It is not used for your primary residence or homestead.
Program details
- Texas investment properties only.
- Loan amounts from $100,000 up to $3 million.
- Minimum credit score of 620. Some scenarios need a higher score.
- No personal income or employment verification.
- Single-family, PUD, townhome, 2-4 units, condos and condotels, and short-term rentals.
- U.S. citizens, permanent and non-permanent residents, ITIN borrowers and foreign nationals.
- Credit events such as foreclosure or bankruptcy need 48 months of seasoning.
- Reserves are required and increase with the loan amount.
- Fixed-rate terms available.
For Texas realtors
Working with an investor client? We can pre-approve buyers on the subject property’s rent, so self-employed and portfolio buyers aren’t held back by their tax returns. Send your client to our investor application and we’ll keep you updated through closing.
Frequently asked questions
What is a DSCR loan?
A DSCR (debt-service coverage ratio) loan is a mortgage for investment property that qualifies you on the property’s rental income compared with its monthly housing payment, instead of your personal income or tax returns.
How is DSCR calculated?
DSCR is the property’s gross monthly rent divided by its proposed monthly payment of principal, interest, taxes, insurance and any HOA dues. For example, if the rent is 20 percent more than the payment, the DSCR is 1.20.
What DSCR do I need?
A DSCR of 1.00 or higher gives you the most options. Ratios below 1.00 can still qualify on many property types with a higher credit score and a larger equity position. Condos and condotels need at least 1.00.
Can I use Airbnb or short-term rental income?
Yes. Short-term rental income can be used, with a portion of the gross rent set aside for operating costs. On a purchase with no rental history, a projected short-term rental estimate may be used if it meets occupancy requirements.
Can I close in an LLC?
Yes. Properties held in an eligible business entity, such as an LLC, can qualify. We confirm the entity documents during review.
Can first-time investors get a DSCR loan?
Yes, with some limits. First-time buyers need a DSCR of at least 1.00, a higher minimum credit score and a smaller maximum loan amount, and short-term rentals are not eligible for them.
Can I do a cash-out refinance on a Texas rental?
Yes. You can refinance a Texas investment property to lower your payment or take cash out for your next purchase or repairs. This program is for investment property only, not your homestead.
Ready to grow your Texas portfolio?
Start your investor application online.
Start my investor pre-approval
Investor application
Prefer to talk? Call College Station at 979-977-3900 or Mont Belvieu at (281) 385-5511.
