Updates from the Augustyniak Lending Team @ Neighborhood Loans

Newsletter| Neighborhood Loans
July 01, 2025•2 min read

By Andrew Augustyniak | Neighborhood Loans 

Unlocking Real Estate Investing with DSCR Loans — Now Available with as Little as 15% Down.

Real estate investors are constantly looking for financing solutions that offer flexibility, speed, and scalability. One of the best tools in today’s lending environment? DSCR loans, or Debt Service Coverage Ratio loans. These products are designed specifically for real estate investors, and they’re evolving in ways that are opening new doors, including low down payments and short-term rental options.

What Is a DSCR Loan?

A DSCR loan is a non-QM (non-qualified mortgage) product that evaluates the cash flow of a property rather than the borrower’s personal income. Instead of tax returns or W-2s, the loan is based on whether the property’s rental income covers the mortgage payment, using a simple formula:

DSCR = Gross Rental Income / PITI (Principal, Interest, Taxes & Insurance)

A DSCR of 1.0 or higher means the property is generating enough to cover itself, and in most cases, that’s all you need for approval. Although we have products now that are ok with a NO RATIO or a Ratio under 50% of the mortgage payment allowed.

What’s New: 15% Down Options

Traditionally, DSCR loans required 20–25% down, which limited access for some investors. But the market is shifting. Lenders are now offering DSCR loans with as little as 15% down, especially for strong credit borrowers (typically 680+ FICO). This creates huge opportunities to:

  • Scale your portfolio faster

  • Preserve more capital for renovations or reserves

  • Enter competitive markets with less cash upfront

These low-down DSCR loans are especially helpful in appreciating markets like Arizona, where equity growth can accelerate your return.

Short-Term Rentals? Absolutely.

Another common myth is that DSCR loans only work for long-term tenants. Not true. Many DSCR lenders now allow short-term rentals (STRs) like Airbnb or VRBO. As long as you can provide market rent analysis or AirDNA-style data to support projected income, you're eligible.

Some outlets may require:

  • Proof of STR income history (3–12 months)

  • Estimated rental reports (like AirDNA, Mashvisor, or similar)

  • DSCR ratios based on average monthly income rather than annual leases

Things to Know Before You Apply

  • Minimum FICO: Typically, 660–680+

  • No personal income docs needed: These loans are perfect for self-employed investors

  • Loan amounts: Up to $2–3 million

  • Interest rates: Slightly higher than conventional loans, but competitive for non-QM

  • Prepayment penalties: Often 3–5 years—know your exit strategy before you sign

  • Title & vesting: You can close in your LLC or entity name

Final Thoughts

Whether you’re flipping to hold, converting to STR, or just looking to acquire your next rental without the paperwork headache, DSCR loans are one of the best-kept secrets in real estate investing. And now, with 15% down and STR options, they’re more versatile than ever.

As AZREIA’s preferred lender, I’m here to help you explore whether this strategy makes sense for your next deal.

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