DSCR Loan Washington State
- LTV: 70%
- Term: 30 Year
- Rate: 6.99%
- Points: 1.0%
What are DSCR Loans used for in Washington State?
What are dscr loans used for in Washington State?
DSCR loans are a powerful financing tool for real estate investors in Washington State, allowing them to qualify for loans based on the rental income potential of the property rather than personal income.
These loans use the Debt Service Coverage Ratio (DSCR)—a calculation comparing rental income to property expenses to determine eligibility and loan amounts.
In Washington State, where rental demand is strong, DSCR loans are commonly used to finance long-term rental properties, short-term vacation rentals, and multi-unit buildings.
For those following the BRRRR investing strategy, DSCR loans are ideal for refinancing after stabilizing a property. This strategy allows investors to build a portfolio of rental properties while preserving capital for future projects.
If you're considering investing in Airbnb rentals, DSCR loans can also help finance short-term rentals in Washington State’s high-demand vacation markets. Learn more in our guide: Financing Airbnb Rentals with DSCR Loans.
To understand how to calculate DSCR and determine your eligibility, visit the How to Calculate DSCR section of this page.
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DSCR loans are a powerful financing tool for real estate investors in Washington State, allowing them to qualify for loans based on the rental income potential of the property rather than personal income.
These loans use the Debt Service Coverage Ratio (DSCR)—a calculation comparing rental income to property expenses to determine eligibility and loan amounts.
In Washington State, where rental demand is strong, DSCR loans are commonly used to finance long-term rental properties, short-term vacation rentals, and multi-unit buildings.
For those following the BRRRR investing strategy, DSCR loans are ideal for refinancing after stabilizing a property. This strategy allows investors to build a portfolio of rental properties while preserving capital for future projects.
If you're considering investing in Airbnb rentals, DSCR loans can also help finance short-term rentals in Washington State’s high-demand vacation markets. Learn more in our guide: Financing Airbnb Rentals with DSCR Loans.
To understand how to calculate DSCR and determine your eligibility, visit the How to Calculate DSCR section of this page.
Washington State DSCR Loan Products
Low Rates, from 1.0% Origination for long term & short term rentals in Washington State.
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Long Term Rental
DCSR Loans Washington State
Rates from 6.75%
LTV Up To 80%
From 1.0% Origination Points
Minimum DSCR: 1.0
Closing Time 14 Days
Appraisal Required
Minimum Credit Score: 660
Property Condition C4 Required
Purchase, Refinance, and Cash Out Available
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Short Term Rental
DCSR Loans Washington State
Rates from 6.95%
LTV Up To 80%
1-2% Origination Points
Minimum DSCR: 1.0
Closing Time 21 Days
Appraisal Required & AirDNA Check
Minimum Credit Score: 680
Property Condition C4 Required
Purchase, Refinance, Cash Out Available
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How To Determine DSCR For Washington State Rental Properties?
The Debt Service Coverage Ratio (DSCR) is calculated by dividing the monthly rent of the property by the monthly loan payment (principal + Interest), taxes, insurance and association fees (PITIA).
DSCR = Rent/PITIA
The basis of a DSCR loan in Washington State, is that the rent you collect from tenants leasing the property should be greater than the cost to own and operate the property.
Investment purpose rental properties with a DSCR greater than 1.0 are called “cash flowing”. You can calculate the DSCR of your rental property with our DSCR Loan Calculator.
(DSCR Evaluation)
Property Value: $474,000
Loan: $379,200
Interest Rate: 7.25%
Ammortization: 30 YR (FRM)
Monthly Rent: $3,995
P&I Payment: $2,586.81
Monthly Taxes: $400.00
Monthly Insurance: $180
Monthly HOA: $0
DSCR 1.26
Washington State DScr Loan process
Ridge Street closes Washington State DSCR loans in 14-21 days.
Apply Or Get Pre-Approved Online
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Receive your term sheet
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Submit Docs
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Appraisal or BPO
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Closing
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When To Use a DSCR Loan?
DSCR loans are used by investors to "hold" real estate. These loans are long term and amortizing. This allows investors to continuously gain equity in their property while generating monthly cashflow.
Investors either use DSCR loans when purchasing a property or when refinancing it. The BRRRR Investing Strategy is popular among investors in which the DSCR loan is used to "cash out" the property.
Benefits Of DSCR LoanS Compared To Other Loan Types
Other benefits of DSCR loans include:
- No income verification
- Can be used for long term and short term rentals (Financing Airbnb's for example)
- Cost Effective
Best Rental Markets In Washington State For DSCR Loans
Washington State's rental property market presents strong opportunities due to its steady population growth, a thriving tech industry, and robust job markets. Cities like Seattle and Bellevue have high demand for both long-term rentals and short-term Airbnb properties, driven by an influx of professionals and tourists. In addition, cities such as Spokane and Tacoma offer more affordable investment options with consistent rental income potential. With its mix of urban and emerging markets, Washington provides profitable opportunities for investors, especially with DSCR loans, which are ideal for financing rental properties in this market.
Seattle
Seattle's rental market offers strong opportunities for investors leveraging DSCR loans, particularly in areas like North Seattle, Capitol Hill, and West Seattle. These neighborhoods provide stable rental demand for long-term investments, while Downtown and Belltown offer potential for high-yield Airbnb properties. With Seattle's higher property prices, finding cash-flowing investments can be challenging. Investors may find better returns by targeting smaller multifamily properties, properties with additional dwelling units (ADUs), or emerging neighborhoods where rental demand is growing. Creative strategies like furnished short term rentals for tech professionals, can be an effective strategy as well.
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Tacoma, WA
Tacoma’s rental market stands out for its affordability compared to Seattle, making it a viable option for investors leveraging DSCR loans. Neighborhoods such as North Tacoma, Proctor District, and Hilltop have seen rising rental demand, driven by expanding infrastructure and employment growth. Tacoma’s port activity and military presence provide a steady pool of renters, which benefits multifamily property investments. Short-term rental potential also exists near Ruston Way and waterfront areas, where tourist traffic supports higher nightly rates. To find cash-flowing opportunities in Tacoma's competitive market, investors can target value-add properties, multifamily units with strong rental histories, or emerging neighborhoods where revitalization efforts are attracting new residents.
Spokane, WA
Spokane’s lower property prices and steady population growth make it an appealing choice for investors using DSCR loans. Neighborhoods like South Hill, Garland District, and Shadle Park offer stable demand for long-term rentals, particularly for single-family homes and small multifamily properties. Spokane’s universities, such as Gonzaga and Eastern Washington University, support consistent student housing demand, while medical facilities and regional employers attract working professionals. Investors can improve cash flow by targeting properties near these employment hubs or by seeking undervalued homes in neighborhoods undergoing revitalization.
Washington State DSCR Loan FAQ’s
How can I Improve the DSCR of my property?
- Increase Your Down Payment. By Increasing your down payment your loan amount will go down and your DSCR will increase. If you’re struggling to improve your DSCR past 1.0, increasing your down payment is an option you may have to consider.
- Ask Your Lender About A Rate Buy Down. Some lenders, including Ridge Street, allow you to pay an additional fee at closing in exchange for a lower rate. In some cases, a rate buydown will allow you lower your DSCR without increasing your overall cash required to close.
- Push For Less Expensive Insurance. Ask your insurance broker if there is anything they can do to lower your policy fee. A lower insurance policy fee will increase your DSCR.
Could I use a DSCR loan if I have to renovate a property?
You can start by getting a short term fix and flip loan to renovate the property and then refinance the property with a DSCR loan. The strategy of buy, rehab, rent, refinance, and repeating is called The BRRRR Strategy.
Can I use a DSCR loan on a Vacation property?
Absolutely! This is one of the main use cases for a DSCR loan.
What loan amounts can I get for a DSCR loan?
Between $50K and $2M. As long as a the DSCR is greater than 1.0, Ridge Street will lend on it.
Are DSCR loans only for investment properties?
Yes. If you are buying a piece of real estate which you intend to live in, then you would not qualify for a DSCR loan.
For refinances and cash outs, does the property have to be rented?
The short answer is no. We understand that investors who fix and refinance properties intend to refinance as soon as possible after renovating a property.
This said, providing a DSCR loan on a rental property that is not rented is higher risk. We'll want to see that the market you are in is very "rentable" at the market rent for your property. We will not provide a DSCR loan on a rental property that has been listed for rent for 3 months with no bites, for example.
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How to Get A DSCR Loan In Washington State with Ridge Street?
Ridge Street is the #1 DSCR Rental Property Lender in Washington State. We pride ourselves on fast closings and fairly priced loans. Get approved for your next project today.
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