DSCR Loans in Texas

What DSCR loans are

A non-QM mortgage product where the lender computes Debt Service Coverage Ratio = NOI ÷ debt service. If DSCR clears their threshold (1.10-1.25 typical), the loan funds regardless of the borrower's W-2 income, DTI, or tax returns. The property qualifies the loan.

Underwriting and qualifying

Lender requires: 660+ FICO (most), 25% down (typical), 6 months of debt-service reserves, signed lease or projected market rent supported by Form 1007 appraiser-rent comps. Closing in 21-35 days standard.

Texas-specific considerations

Texas's foreclosure timeline (non-judicial, ~41 days from notice to sale) directly affects dscr lender risk pricing. Shorter foreclosure timelines (Texas, Tennessee, Alabama) reduce lender loss-given-default and typically translate to 25-50 bps better pricing than longer-timeline judicial states (New York, Florida, Pennsylvania).

What financing looks like at Texas price points

At McAllen's typical $229k home value with 6.83% gross rent yield, DSCR clears comfortably at 75% LTV / 8% rate for most properties — yield is high enough that even after vacancy and maintenance reserves, the property covers debt service with margin. Texas is one of the more BRRRR-friendly states for DSCR refis at current rates.

Texas lender ecosystem

Texas has one of the most active DSCR-lender ecosystems in the country — Visio, Kiavi, Lima One, and RCN all originate aggressively here, often producing tighter pricing than national averages.

Best fit

Investors past the 10-property conventional cap. Self-employed borrowers. Anyone building a rental portfolio where W-2 underwriting is impractical.

When to use something else

Owner-occupants (use conventional). Single-property buyers who qualify conventional (DSCR pricing is 100-200 bps higher).