Florida DSCR Loans

A DSCR loan is a mortgage that evaluates a property’s ability to generate enough income to cover its annual mortgage payments. Lenders evaluate the property’s DSCR (Debt Service Coverage Ratio), which measures its ability to generate enough rental income to cover debt obligations.

A DSCR loan differs from a traditional loan because it is based on a property’s rental income potential rather than the borrower’s personal. Once approved for a loan, investors can use it to purchase or refinance rental properties without going through an extensive personal income verification process. Instead, lenders focus on the property’s cash flow to determine if it qualifies. While these loans offer a great deal of flexibility for real estate investors, they typically have higher interest rates and larger down payment requirements compared to conventional mortgages.

Eligibility for a DSCR loan is based on the property’s ability to generate enough rental income to cover its debt payments, rather than the borrower’s personal income. Lenders calculate the Debt Service Coverage Ratio (DSCR) by dividing the property’s net operating income (NOI) by its monthly debt obligations. A higher ratio indicates a stronger cash flow, making the borrower a lower risk.

In addition to DSCR, lenders consider factors such as credit score, loan-to-value (LTV) ratio, property type, and cash reserves. Borrowers, more commonly, need to have a credit score of at least 620, though higher scores can lead to better terms. A down payment of 20-25% is common, with lower DSCR ratios often requiring larger reserves or higher equity. Some lenders also assess the property’s market rent compared to actual rental income to ensure sustainability.

A DSCR loan in Florida is best suited for real estate investors who want to buy or refinance rental properties without using personal income for qualification. This applies to:

• Self-employed individuals who lack W-2 income or prefer to bypass extensive tax documentation.
• Both new and experienced investors looking to grow their rental portfolios.
• Out-of-state or international buyers seeking investment opportunities in Florida without a U.S. income history.
• Short-term rental investors targeting high-demand locations such as Miami, Orlando, or Tampa for platforms like Airbnb and VRBO.

Current DSCR loan rates in Florida range between 6% and 8% (typically). Though, the exact rate you qualify for depends on factors like credit score, loan-to-value (LTV) ratio, DSCR ratio, and property type. Borrowers with strong financial profiles may secure lower rates, while those with higher risk factors might see rates at the upper end of the range.

No, you don’t have to be a professional real estate investor to apply for a DSCR loan in Florida, but the loan is designed specifically for income-generating rental properties. This means that even if you’re a first-time investor or someone looking to buy a rental property for passive income, you can still qualify.

A DSCR loan can be used to refinance or purchase rental properties, including single-family homes, multi-family units, condos, and townhomes intended for long-term or short-term rental income. Investors can also use these loans to finance vacation rentals on platforms like Airbnb and VRBO.

Additionally, DSCR loans allow real estate investors to refinance existing properties, secure better terms, or cash out equity to expand their portfolios. They are also useful for fix-and-hold investments, where properties are renovated and rented out. However, DSCR loans cannot be used for primary residences, as they are strictly for income-generating properties.

No, DSCR loans cannot be used for primary residences—only for rental properties, including long-term leases and short-term vacation rentals.

Terms can vary but generally involve higher interest rates and down payments than conventional loans. We offer 30 year fixed DSCR loans and loan term ARM programs.