DSCR Loan Texas
- LTV: 75%
- Term: 30 Year
- Rate: 7.65%
- Points: 1.75%
What are DSCR Loans used for in Texas?
What are dscr loans used for in Texas?
DSCR loans are a powerful financing tool for real estate investors in Texas, 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 Texas, 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 Texas’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 Texas, 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 Texas, 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 Texas’s high-demand vacation and business 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.
Texas DSCR Loan Products
Low Rates, from 1.0% Origination for long term & short term rentals in Texas.
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Long Term Rental
DCSR Loans Texas
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 Texas
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 Texas 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 Texas, 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
Texas DScr Loan process
Ridge Street closes Texas 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 Texas For DSCR Loans
Texas stands out as a powerhouse for real estate investors, boasting a booming economy, steady population growth, and a diverse range of rental markets. From major metropolitan areas to thriving suburban hubs, the Lone Star State offers excellent opportunities for both long-term and short-term rental properties. DSCR loans empower investors to leverage rental income to secure funding and scale their portfolios. This guide explores the top rental markets in Texas and highlights what makes them ideal for DSCR-funded investments, whether you’re seeking consistent monthly cash flow or targeting areas with strong growth potential.
Dallas
Dallas is a prime destination for rental property investors, fueled by its thriving economy, robust job market, and rapid population growth. As a major business hub, the city attracts a steady influx of professionals seeking long-term rental housing. Dallas also boasts a vibrant cultural scene and world-class amenities, enhancing its appeal to renters. With competitive property prices and rising rental demand, investors can leverage DSCR loans to capitalize on this dynamic market. The city's blend of economic stability and rental income potential makes it an ideal choice for building a profitable and sustainable investment portfolio.
Houston
Houston is a standout market for rental property investors, thanks to its diverse economy, strong population growth, and affordability. As a global energy hub, the city draws a steady flow of professionals, creating consistent demand for long-term rentals. Houston's thriving medical and tech industries further bolster its rental market. With a mix of affordable housing options and competitive rental rates, investors can use DSCR loans to secure properties that generate reliable cash flow. The city’s resilience and economic opportunities make it a top choice for building a stable and profitable investment portfolio.
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Austin
Austin’s rental market offers exceptional opportunities for BRRR (Buy, Rehab, Rent, Refinance) investors, driven by the city’s rapid growth and high rental demand. Known for its booming tech industry and vibrant cultural scene, Austin attracts a diverse population, including young professionals and families, seeking quality rental homes. Property values have risen steadily, but strategic renovations can significantly boost equity and rental income potential. With DSCR loans, investors can capitalize on Austin’s dynamic market, using the BRRR strategy to scale portfolios and achieve long-term financial success.
San Antonio
San Antonio is a rising star for rental property investors, thanks to its affordable housing market, steady population growth, and thriving local economy. The city’s strong military presence, robust healthcare sector, and growing tech scene attract a consistent pool of renters. San Antonio’s lower cost of living and family-friendly appeal make it a hotspot for long-term rental demand. For investors using DSCR loans, the city offers excellent opportunities to secure cash-flowing properties in a stable and steadily appreciating market.
Florida 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 Florida with Ridge Street?
Ridge Street is the #1 DSCR Rental Property Lender in Florida. We pride ourselves on fast closings and fairly priced loans. Get approved for your next project today.
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