DSCR loan questions — answered in plain language.

Worked example: rent = $2,500/month. PITIA = $1,420 P&I + $330 taxes + $110 insurance + $60 HOA = $1,920. DSCR = $2,500 ÷ $1,920 = 1.30x — the property generates 30% more income than it costs to carry. A result below 1.0 means the rent doesn't cover the payment. Lenders use the lower of the signed lease or the Form 1007 appraiser market-rent estimate — not the Zillow figure or the listing.

P = Principal. I = Interest at the note rate. T = Property taxes (actual annual bill ÷ 12 — use the post-sale assessed value, not the seller's homestead-exempt bill). I = Insurance (hazard + flood if required — get a real quote; coastal properties can run $300–600/month). A = HOA dues (full monthly amount). Taxes and insurance are the two PITIA components that most often surprise borrowers at underwriting.

Credit extended primarily for a business purpose is exempt from Regulation Z altogether (12 CFR 1026.3(a)(1)), and comment 3(a)-4 treats credit to buy or improve rental property the owner will not occupy as business purpose. So neither the ability-to-repay and qualified-mortgage rules (12 CFR 1026.43) nor the TRID disclosure rules apply, and that exemption is what lets a lender qualify the loan on the property's rent instead of your income; a consumer non-QM loan still needs ability-to-repay income verification under 1026.43(c). The exemption has an occupancy limit: under comment 3(a)-4, if you expect to live in the property for more than 14 days in the coming year, it is not treated as non-owner-occupied. The trade-off is that lenders bear more risk, which the rate reflects — see "What rate should I realistically expect?" below for the illustrative bands.

These illustrative ranges are from Jun 17, 2026, not live pricing: a strong file (740+ FICO, LTV (how the loan amount compares to the property value) at or below 75%, DSCR at or above 1.0, a 5-year prepayment penalty accepted) ran approximately 6.25–6.75% on a 30-year fixed. Waiving the prepayment penalty adds 0.50–0.80% on top of any tier. Weaker files (lower FICO, higher LTV, sub-1.0 DSCR, short-term rental) priced further up the sheet, down to 7.5–8.25% at the 620–659 FICO band before that same no-penalty add-on. ARM (adjustable-rate mortgage — the rate is fixed for a few years, then resets periodically) options started lower; check the reset cap structure carefully. Verify current pricing before making any decisions.

Greenstreet is a brokerage, not the lender, so while we move your file along we cannot set or promise the lender's closing date. Ask us — or the lender on your file — for their current turn times in writing.

Some accept as low as 0.75 with compensating factors such as a strong credit score and more cash reserves. Sub-1.0 options exist, but lender choices narrow sharply and reserves jump to 9–12 months. If the DSCR is below 0.75, most institutional programs don't apply.

The applicable floor also depends on loan amount, leverage, transaction type, property type, DSCR, borrower status, and the current program grid. Higher credit and lower leverage generally improve the available structure; verify the exact current matrix before relying on a threshold or pricing assumption.

More equity can improve payment coverage and may expand available structures. Treat any down-payment figure as a scenario input until the current program matrix is reviewed for the specific deal.

Greenstreet's general estimate starts from a DSCR-tiered base:

On top of that base, overlays can add extra months:

• Short-term rental strategy — +3
• Credit score below 680 — +3 (below 640 — +6)
• First-time investors — +3
• Loans above $1M — +3
• Foreign nationals — +6
• LTV above 80% — +1
• California properties — +6, applied to every DSCR tier

Everything is capped at 12 months total. This is a general estimate — the specific program you qualify for may set its own reserve minimum (see that program's page), which governs your actual file. Retirement accounts count at 70% if you are 59½ or older. Cryptocurrency counts as zero.

LLC vesting is standard. You will sign a personal guaranty (full recourse). One structural exception: a purchase made inside a self-directed IRA or Solo 401(k) must be non-recourse, because federal rules treat a personal guaranty from the account holder as a prohibited transaction between the plan and its owner — whether a given Greenstreet program supports that structure is a separate question to confirm before relying on it. Entity limits are set program by program: some programs commonly cap the entity at 4 owners, require a guarantor who owns at least 51%, and allow layered LLCs (an LLC inside another LLC) only 2 layers deep, while others instead require every member above a 20–25% stake to guarantee. Check the specific program's matrix. Caution: in New Jersey, lender readings of N.J.S.A. 46:10B-2 split, and by default only a C-Corp or S-Corp borrower can rely on a prepayment penalty — an LLC may have to take the no-penalty pricing.

Confirm the current program matrix and required evidence before treating a scenario as eligible. FIRPTA may affect a later sale, so coordinate transaction-specific tax questions with a qualified cross-border tax professional.

1. Soft file review (Day 1–2): the provider checks program fit — property type, DSCR range, FICO tier, entity structure, reserves.
2. Term sheet (Day 2–4): indicative rate range, fees, reserve requirement, prepay options — not a commitment.
3. Formal application + appraisal ordered (Day 3–5): you complete the application and pay the appraisal deposit; the 1007 rent schedule is part of the appraisal.
4. Document submission (Day 5–10): submit the full doc package in parallel with the appraisal.
5. Underwriting (Day 12–20 after appraisal returns): DSCR verified at the locked rate, title reviewed, conditions issued.
6. Clear to close → closing → funding.

Business-purpose loans are exempt from Regulation Z, so no federal 3-business-day Closing Disclosure waiting period applies; a lender may still provide a settlement statement or CD-style disclosure voluntarily, so ask when yours will arrive. Total target: 21–30 business days on a clean file. The appraisal is the critical path — order it as early as possible.

1. Buy down the rate: each 0.25% rate reduction saves ~$15–17/month per $100K of loan. On a $400K loan, buying down 0.50% saves ~$130/month in P&I. Points cost roughly 1% of loan per 0.25% of rate reduction.
2. Switch to interest-only (IO): IO eliminates the principal component, saving roughly $250–350/month on a $400K loan at current rates. Requires 720+ FICO, ≤75% LTV on most programs.
3. Raise the qualifying rent: provide the appraiser with comparable rental data before the inspection; sign a market-rate lease before closing (if vacant); or use documented 12-month STR history if the property is STR-eligible.
4. Increase the down payment: going from 80% to 75% LTV on a $400K property drops the loan by $20K, cutting principal and interest by roughly $130 to $140 per month at the rates quoted above AND unlocks the better LTV rate tier, saving an additional 0.25–0.50%.

Levers 2 and 4 combined can often take a 0.92x DSCR to 1.10x+ without touching the rent.

Below 1.00x, the deal won't qualify. The headroom between your offered rate and the deal-break rate (in basis points) tells you how much rate shock the deal can absorb before it fails — useful for ARM reset modeling and refinance planning. Greenstreet's Deal Analyzer surfaces both numbers on every solve.

Lenders use Form 1007 market rent from the appraisal — the appraiser's estimate of what the property would rent for — as the qualifying figure. If you do have a lease, the lender uses the lower of the lease rent and the 1007 rent. Vacant properties and new acquisitions are fine.

Lenders use the lowest of: (1) Form 1007 long-term rental appraisal, (2) AirDNA projected income after a haircut, or (3) documented 12-month platform payout history after a smaller haircut. Documented history is discounted less than a projection because it is evidence rather than a forecast: this site's model uses 80% of a projection and 90% of documented history. Each provider sets its own figures. If you don't have 12 months of STR history, the 1007 long-term rent controls — which can be significantly lower than your Airbnb projection. Short-term rental properties also require 3 extra months of reserves (mortgage payments kept in the bank after closing). STR legality is a city and county question, and Greenstreet holds no municipal STR dataset — confirm the local rule before you rely on the income.

Commonly excluded: assisted living or group homes, agricultural properties over 20 acres, co-ops, fractional ownership or timeshares, mixed-use commercial, properties under 500 sq ft. Eligibility follows the program, though: Greenstreet Magnolia, for example, lists 5–9 units, mixed-use and commercial-zoned property, and agricultural, co-op and leasehold collateral. Properties must be in C4 condition or better (no significant deferred maintenance).

Property docs: executed purchase contract or mortgage statement, Form 1007 rent schedule (from the appraisal — not something you provide), signed lease if occupied, HOA dues statement. Insurance: hazard binder showing investment occupancy type, flood binder if the property is in a FEMA Special Flood Hazard Area, wind/hurricane coverage where required. Entity docs (if buying through an LLC): Operating Agreement, Articles of Organization, Certificate of Good Standing dated within 90 days, EIN letter, resolution to borrow. Borrower docs: photo ID, SSN or ITIN, credit authorization, 12 months bank statements for reserves. Funds to close: 60-day paper trail on down payment and closing cost funds. The three items that most commonly delay closings: insurance binder with the wrong occupancy type, LLC with lapsed good standing, and a reserves shortfall discovered late in the process.

This is the floor and controls if you have no STR history. (2) AirDNA projected income after a haircut — the market estimate, reduced for vacancy and seasonality; this site's model uses 80%. (3) Documented 12-month STR gross revenue after a smaller haircut (this site's model uses 90%, because history is evidence rather than a forecast) — only available with full platform payout statements for all 12 months. If the property has never operated as a short-term rental, you qualify on the 1007 long-term rent regardless of what Airbnb projects. Short-term rental adds 3 extra months to the reserves requirement.

A prepayment penalty (a fee some loans charge if you pay the loan off or refinance early — typically a declining schedule: 3/2/1% over three years or 5/4/3/2/1% over five) saves 0.50–0.80% in rate vs the no-penalty option. That monthly savings compounds over a multi-year hold and often more than offsets the penalty itself. The math favors accepting the penalty unless you expect to sell or refinance soon. Caution: some states restrict or ban prepayment penalties on investment property loans. Check the State Rules page before assuming the penalty option is available.

Both require the property to re-qualify on DSCR at the new rate and new loan amount.

For a cash-out refinance: Fannie Mae's rule (B2-1.3-03) needs at least one borrower on title for 6 months, and an existing first mortgage being paid off must be at least 12 months old, note date to note date. DSCR programs commonly allow cash-out at 6 months (some sooner), often valuing the property at the purchase price plus documented improvements until 12 months have passed. Exception: if you purchased with all cash (delayed financing), some lenders allow cash-out within 6 months, with the cash-out capped at your original acquisition costs.

Some programs go to 70% on larger loans, short-term rental properties, or lower credit scores. Rate & term refinances are generally allowed up to 80% LTV. The DSCR must qualify at the new, higher loan balance — if rates have risen since purchase, the higher payment may push DSCR below the qualifying floor.

Example: $8,000 in closing costs on a $300/month payment reduction = 26.7 months to break even. If you sell or refinance again before month 27, the refinance cost you money. Important: if you have a prepayment penalty (a fee some loans charge if you pay off or refinance early) on the existing loan, add the full penalty amount to the closing costs. A 3% penalty on a $400K loan is $12,000 — that adds 40 months to break-even, pushing it past 5.5 years. Run this before you pay the appraisal deposit.

A lender is covered only after 1,000 covered originations in each of the two preceding calendar years, and HMDA-reportable loans are excluded (12 CFR 1002.104(b)(2)) — which takes most DSCR purchase and refinance loans on dwellings out of 1071 data when a HMDA reporter makes them. (2) HOEPA: its thresholds update each year, but HOEPA covers consumer credit and does not apply to business-purpose loans. (3) Minnesota HF 3437 (2026 Minn. Laws ch. 58): DSCR loans were always legal in Minnesota. For loans executed on or after August 1, 2026, a purchase-money, first-lien or DSCR loan escapes § 58.137's prepayment-penalty limits only if it is made for investment purposes only, no borrower, guarantor or cosigner occupies or intends to occupy the property, and the seller does not stay in the property after the sale. None of these change the DSCR math — they change the paperwork.

The QBI deduction was made permanent at 20% — an earlier House draft would have raised it to 23%, but that change did not survive into the signed law, so model 20%. Keep two numbers apart on a $400K rental with 20% land value. The Year-1 depreciation deduction is about $11.6K on straight-line ($320K of building over 27.5 years, full year), or about $80K–$89K if a cost-segregation study moves a quarter of the building into property that takes 100% bonus ($80K of bonus plus about $8.7K of straight-line on the rest). The tax that deduction saves depends on your bracket and on your passive-activity status under IRC §469: a passive investor may have to carry the loss forward rather than use it this year. Consult a CPA; Greenstreet's Tax Engine models this with OBBBA defaults.