How DSCR Loans Work — The Complete Investor Guide
DSCR (Debt Service Coverage Ratio) loans are the preferred financing vehicle for serious rental portfolio investors. At Sab Tera Lending, our DSCR rental loans qualify entirely on the property’s income — no W-2s, no tax returns, no pay stubs. We lend across New York, New Jersey, Connecticut, Florida, Texas, North Carolina, South Carolina, Georgia, and Alabama.
How DSCR Is Calculated
DSCR = Monthly Gross Rent ÷ Monthly PITIA (Principal + Interest + Taxes + Insurance + HOA). A DSCR of 1.0 means the property breaks even. A ratio of 1.25 means the property generates 25% more income than its debt obligations. We require a minimum DSCR of 1.0 for standard programs, and offer a no-ratio DSCR program (minimum 0.75 DSCR) for experienced investors with strong equity. See our NJ DSCR loan guide →
DSCR Rate Tiers
| DSCR Ratio | Rate Tier | Max LTV | Notes |
|---|---|---|---|
| 1.25+ | Best rates — from 6.5% | 80% LTV | Ideal profile |
| 1.0–1.24 | Standard — from 7.0% | 75% LTV | Minimum standard |
| 0.75–0.99 | No-ratio program — from 7.5% | 70% LTV | Experienced investors |
DSCR vs. Conventional Mortgage
| Feature | Sab Tera DSCR | Conventional Bank |
|---|---|---|
| Income Verification | None ✔ | W-2 + Tax Returns |
| Qualification Basis | Property Cash Flow ✔ | Personal DTI Ratio |
| Close Time | 14–21 Days ✔ | 45–90 Days |
| Max Properties | Unlimited ✔ | 4–10 (then cut off) |
| LLC Borrowing | Yes ✔ | Rarely |
| Vacant Properties | Yes (market rent) ✔ | No |
| STR/Airbnb Income | Yes ✔ | Rarely |
| Upfront Fees | $0 to Apply ✔ | Various |
DSCR Loans and the BRRRR Strategy
The BRRRR method (Buy, Rehab, Rent, Refinance, Repeat) pairs perfectly with our loan lineup. Use our fix and flip loan to acquire and renovate, then refinance into a DSCR loan once tenanted or at market rent. Pull cash out to fund your next acquisition — full cycle, one lender, no income verification at any stage.
Vacant Properties and Short-Term Rental DSCR
We allow vacant properties at closing, using market rent from the appraisal for DSCR calculation. For short-term rentals (Airbnb, VRBO), we accept trailing 12-month documented STR income or AirDNA market projections. STR DSCR loans are especially strong in Florida resort markets, Texas Gulf Coast, South Carolina coastal towns, and New Jersey Shore communities. Note that some municipalities restrict short-term rentals — confirm local ordinances before closing.
DSCR Loans by State — Our Service Markets
New York
New York is our home market. We fund DSCR loans across all five NYC boroughs, Nassau County, Suffolk County, and Westchester. NYC multifamily — particularly Brooklyn, Queens, and the Bronx — produces some of the strongest DSCR ratios in the country. Jersey City commuter overflow, Long Island LIRR corridor properties, and Hamptons seasonal STR properties are all active DSCR markets. NY DSCR loans →
New Jersey
NJ is one of the most active DSCR markets in the US. Hudson County (Jersey City, Hoboken, Bayonne) produces DSCR ratios of 1.25–1.45 on 2–3 family properties. The Jersey Shore (Asbury Park, Cape May, Long Branch) is ideal for STR DSCR qualification on Airbnb income. Northern NJ benefits from NYC commuter demand across Bergen, Essex, Union, and Passaic Counties. High NJ property taxes are factored into our PITIA calculations — we pull the actual tax for every address. NJ DSCR loans →
Florida
Florida is one of the most STR-active DSCR markets nationally. Miami, Orlando, Tampa, and Jacksonville all offer strong long-term rental fundamentals. Florida Keys, Panama City Beach, and coastal Pinellas/Manatee Counties produce exceptional Airbnb/VRBO income. No state income tax, strong in-migration, and one of the highest concentrations of short-term rental activity in the US make Florida a prime DSCR market. FL DSCR loans →
Texas
Texas offers exceptional DSCR fundamentals across four major metros. Houston’s energy corridor produces 2–3 family rental demand across Midtown and Montrose. Dallas/DFW commands premium rents from finance and tech workers. Austin’s university and tech economy drives strong occupancy. San Antonio benefits from military (JBSA) and healthcare employment. No state income tax and strong population growth make Texas DSCR loans highly attractive for hold strategies. TX DSCR loans →
North Carolina, South Carolina, Georgia & Alabama
The Southeast is one of the fastest-growing DSCR markets in the country. Charlotte NC and Raleigh-Durham produce strong multifamily DSCR ratios from financial services and tech employment. South Carolina coastal markets — Charleston, Myrtle Beach, Hilton Head — are premier STR DSCR opportunities. Atlanta GA drives rental demand from corporate headquarters relocation (Fortune 500 density). Birmingham and Huntsville AL offer high cash-flow-to-price ratios for DSCR investors seeking strong yields. Southeast DSCR loans →
Connecticut
Connecticut offers a high-income suburban rental market driven by NYC and financial services professionals. Fairfield County (Stamford, Norwalk, Westport, Greenwich) commands premium rents with exceptional tenant stability. New Haven benefits from Yale University demand. Hartford’s financial and insurance sector anchors steady rental demand statewide. CT DSCR loans →