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DSCR loans for Dallas–Fort Worth rental property
Long-term financing approved on what the property earns. Single-family rentals, duplexes to fourplexes, townhomes and build-to-rent homes, with no tax returns or employment check.
DSCR loan terms
| To buy | up to 85% LTV |
| Cash-out refinance | up to 80% LTV |
| Credit scores from | 600 |
| Fixed terms | 5 to 30 years |
| Prepayment choices | 3-year, 5-year or none |
| Typical closing | about 30 days |
At a 600 score the limit is 70% loan-to-value. Stronger credit qualifies for up to 85% on a purchase.
DSCR in plain terms
DSCR is short for debt service coverage ratio. It answers one question: does the rent pay the mortgage? If it does, the loan can be approved without looking at your personal income.
DSCR = monthly rent ÷ monthly payment. The payment counts principal, interest, property taxes, insurance and any homeowners association fee.
| Rent | Payment | DSCR | Reading |
|---|---|---|---|
| $2,860 | $2,200 | 1.30 | Income is 30% above the payment |
| $2,200 | $2,200 | 1.00 | Income equals the payment |
| $1,980 | $2,200 | 0.90 | Income is short; expect less leverage or a higher rate |
We prefer a ratio of 1.0 or higher. A strong borrower can qualify under 1.0 with lower leverage, and there is a no-DSCR option up to 75% loan-to-value at a higher rate.
Why taxes and insurance matter so much in Texas
- Property tax. Texas has no state income tax, so local governments rely on property tax, and combined rates in Dallas–Fort Worth are often around 2% of value or more. Investment property gets no homestead exemption. For the 2024 to 2026 tax years, the taxable value of non-homestead property worth $5 million or less can rise no more than 20% a year, but the limit resets when the property is sold, so a new buyer is taxed on full market value.
- Insurance. Hail and wind drive insurance costs across the metroplex, and an older roof can raise the premium or limit coverage. Parts of the area along the Trinity River and its creeks are in FEMA flood zones. Get insurance quotes before you make an offer.
- HOA fees. Many newer subdivisions in Collin, Denton and Tarrant counties have association dues. They count in the payment.
Use the tax bill at full market value, not the seller’s capped or homestead figure, and get a real insurance quote before you make an offer. Those two numbers decide whether many North Texas rentals clear 1.0.
Which rent counts
- Long-term rentals. Year-long leases are the core of the market, with demand from the metroplex’s fast-growing workforce. We use the lease or the market rent from the appraisal.
- Duplexes to fourplexes. Every unit’s rent counts.
- Short-term rentals. Short-term rental rules differ city by city across North Texas. Dallas adopted a ban on short-term rentals in single-family zones in 2023, but the courts have blocked its enforcement while the city appeals, and every operator must still register with the city. Fort Worth allows short-term rentals only in mixed-use, commercial and similar districts, not in residential zones, and Arlington limits them to designated areas. Because the rules can change quickly, we underwrite on long-term rent unless the address can legally host short stays.
- Rental rules. Texas law bars cities from adopting rent control, so rents follow the market. Dallas requires owners of rented single-family homes, duplexes and condos to register each year, and the city inspects each single-family rental at least once every five years.
Loan options
- Fixed terms from 5 to 30 years. The 10/1 interest-only and the 30-year fully amortized loan are chosen most often.
- Qualifying on the interest-only payment is available.
- A 3-year or 5-year prepayment penalty. The 5-year option usually prices about 0.25 to 0.5% lower. No penalty is available at a higher rate.
- One property or a whole portfolio.
Refinancing after a renovation or a build
If you renovate or build a property and decide to keep it, a DSCR loan replaces the short-term fix and flip or construction loan with long-term debt. A cash-out refinance at up to 80% loan-to-value can hand back much of the cash you put in. Texas restricts cash-out loans on homesteads, but those rules do not apply to investment property.
Documents we ask for
- Loan application
- Signed purchase contract, or your original settlement statement for a refinance
- The lease, or market rent from the appraisal
- Two months of bank statements
- Insurance and title contacts, and someone to let the appraiser in
- For a property in an association: the HOA dues and any special assessments
- For an LLC: certificate of formation, EIN letter and company agreement
The full list is in our hard money loan document checklist.
DSCR loans: common questions
We prefer 1.0 or higher, which means the rent covers the full payment. Strong borrowers can qualify below 1.0 with lower leverage, and a no-DSCR program is available up to 75% loan-to-value at a higher rate.
Usually we underwrite on long-term rent, because short-term rental rules in Dallas, Fort Worth and Arlington are restrictive or unsettled. Ask us about a specific address.
Most often it is property tax or insurance. A new owner is taxed on full market value without a homestead exemption, and hail and wind coverage is expensive in North Texas.
Yes, up to 80% loan-to-value. Texas’s special cash-out rules apply to homesteads, not to investment property.
The minimum is 600, at up to 70% loan-to-value. Higher scores qualify for up to 85% of the purchase price.
No. A DSCR loan is approved on the property’s rental income. There is no employment, tax return or debt-to-income review.
No. These are business-purpose loans and are not reported on your personal credit like a conventional mortgage. There is no cap on how many properties we will finance for you.
Buying or refinancing a North Texas rental?
Send the address, the price and what you plan to do with the property. We will reply with the leverage and pricing that fit your deal.