What Is a DSCR Loan in Florida? Qualifying on Rent, Not Income
A DSCR loan Florida investors use qualifies on the property's rent instead of tax returns. Here is how the ratio works and what lenders require.
Educational content only. This article is for informational purposes and does not constitute financial, legal, or lending advice. Loan programs, rates, and eligibility requirements change frequently. Consult a licensed mortgage professional before making any borrowing decision. Mortgage Capital | NMLS# 1859012 | Licensed in Florida.
A DSCR loan Florida investors use qualifies on the property rather than on you. The lender compares the rent against the full mortgage payment and lends on that ratio.
No tax returns. No W-2s. No debt-to-income calculation. That is why self-employed investors and anyone already carrying several mortgages end up here. Our DSCR loan page covers the program in full.
How the ratio works
Debt-service coverage ratio divides monthly rent by the monthly obligation, which includes principal, interest, taxes, insurance and any association dues.
A ratio of 1.00 means rent exactly covers the payment. Most Florida lenders want 1.00 or better, and pricing improves around 1.25.
Some programs go below 1.00 with a larger down payment. Run your property through the DSCR calculator before you make an offer.
What Florida does to the ratio
Two local costs sit inside the denominator and both are larger here than most investors model.
Property taxes reset when you buy. The seller's homestead exemption and Save Our Homes cap disappear on a rental, so the bill frequently jumps well above what they paid.
Insurance is the other. Landlord policies on a coastal property can run double an inland equivalent, and condo master policies have risen sharply since the 2021 reserve laws. Both belong in your DSCR at quoted numbers.
Typical terms
Expect 20% to 25% down, credit in the 660s and up, and a rate above what an owner-occupied loan carries. You are trading rate for the absence of income documentation.
Most programs allow purchases in an LLC, which conventional financing generally does not. That alone brings a lot of investors across.
Prepayment penalties are common on DSCR. Ask about the structure before you sign if you plan to sell or refinance within a few years.
Where DSCR fits against other options
If your tax returns support the debt, a conventional investment property loan usually prices better.
If you are buying to renovate and flip rather than hold, hard money is the tool, with DSCR as the refinance exit once it is leased.
For a broader income-flexible option, look at bank statement loans. The CFPB explainer on non-QM lending is a useful primer on the category.