DSCR loans in San Antonio

What a DSCR loan is

DSCR stands for debt service coverage ratio: how well a property's rent covers its mortgage payment. Instead of your income, the lender looks at the property's income, along with your credit, savings and down payment.

That means no tax returns, no pay stubs and no debt-to-income ratio. It works for single-family rentals, 2 to 4 unit properties and, with some lenders, short-term rentals. It's for investment property only, not a home you'll live in.

Like bank statement loans, these aren't Fannie Mae or Freddie Mac loans, so every lender has its own grid. I do a lot of these, and comparing lenders is where most of the savings come from.

How the ratio works

DSCR = monthly rent ÷ the full monthly payment. The payment includes principal, interest, property taxes, insurance and any HOA dues.

An illustration only, not a quote. Your rent, payment and ratio depend on the property, the loan and the lender.

• 1.0 or higher: the rent covers the payment. Many lenders look for at least this.
• Around 1.25 or higher: usually better pricing and more options.
• Below 1.0: some lenders still lend, with more down or more savings.

For a purchase, the rent usually comes from the appraiser's estimate of market rent, or from the lease if the home is already rented.

What you need to qualify

• Down payment: typically 20% to 25%. Some lenders go to 15% for strong files.
• Credit: minimums usually start around 620 to 660, with better pricing above about 700.
• Savings after closing: commonly several months of the property's payment in reserve.
• A rent-ready property: homes that need major work usually need a different loan first.

Watch for a prepayment penalty. Many DSCR loans charge a fee if you pay off or refinance in the first few years, often in exchange for a lower rate. I'll show you options with and without one so you can match it to how long you plan to hold.

Running the numbers in San Antonio

Two local costs decide most San Antonio DSCR deals:

• Property taxes. Texas has no state income tax, so property taxes are high, and a rental doesn't get the homestead exemption you'd get on your own home. That puts the full tax bill in the payment. My Bexar County property tax guide has 2026 rates by school district.
• Insurance. Landlord policies cost more than homeowner policies, and premiums in Texas have climbed. Get a real quote before you count on the ratio.

Two homes with the same price and rent can land on different sides of 1.0 just because of the school district or the insurance quote. I'll run the ratio on any property you send me before you make an offer.

DSCR or conventional?

A conventional loan for a rental usually has a lower rate and can start at 15% down, but it uses your personal income and debt-to-income, and there's a limit on how many financed properties you can have. A DSCR loan usually costs more, but it:

• Doesn't need tax returns, so write-offs don't hurt you.
• Doesn't count your other rentals against your debt-to-income.
• Can close in an LLC.

Self-employed and buying a home to live in? See my bank statement loan guide.