The lowest DSCR we will actually accept on a 1-4 unit investor loan is 0.75x — but only on a single-property loan, only for an experienced investor, only on an occupied property, and only at a leverage and credit combination that survives the sub-1.00 grid. For most files the real floor is 1.00x, and a long list of overlays pushes it to 1.10x or 1.25x before you ever get to negotiate.
There is no single number. That is not evasion. The DSCR floor is an output of the file, not an input to it. Change the loan amount, the unit count, the FICO, the rental strategy, or the borrower's track record, and the required minimum moves with it.
This page walks the actual tiers, what each one costs in LTV and reserves, how the ratio is computed, and every overlay in our program that raises the floor.
The structural answer: two eligibility grids, not one threshold
Our 1-4 unit investor program does not publish a single minimum DSCR. It publishes two eligibility matrices — one for loans at DSCR 1.00 or above, and a second, tighter one for loans at DSCR 0.75 to 0.99. Below 0.75 there is no grid at all. That is the hard edge.
Both grids are indexed on the same two axes: minimum credit score and maximum loan amount. Here is what they permit on a standard single-property loan.
| Min FICO | Units | Max loan | DSCR ≥ 1.00 — Purchase / Rate-Term | DSCR ≥ 1.00 — Cash-Out | DSCR 0.75–0.99 — Purchase / Rate-Term | DSCR 0.75–0.99 — Cash-Out |
|---|---|---|---|---|---|---|
| 700 | 1-4 | $1,500,000 | 80% | 75% | 75% | 70% |
| 700 | 1-4 | $2,000,000 | 75% | 70% | 65% | 60% |
| 680 | 1-4 | $1,500,000 | 80% | 70% | 75% | 65% |
| 680 | 1-4 | $2,000,000 | 70% | 65% | 65% | 55% |
| 660 | 1 | $1,500,000 | 75% | 65% | 70% | 60% |
| 660 | 1 | $2,000,000 | 65% | 60% | 60% | 50% |
Read the bottom row before you read anything else. At a 660 middle score — our program minimum, required of all guarantors — you are limited to one-unit properties, and a cash-out at the $2,000,000 tier with a sub-1.00 DSCR caps at 50% LTV. That is the true bottom of the program: it exists, it is written down, and almost nobody wants the terms it comes with.
The pattern is consistent across every row: dropping below 1.00 costs you between 5 and 10 points of LTV, and the penalty widens as the loan gets larger and the credit gets thinner. A 700-score borrower at $1.5M gives up 5 points to go sub-1.00. A 680-score borrower at $2M gives up 10 points on cash-out.
How the ratio is actually calculated — PITIA, not P&I
Most borrowers who arrive with a DSCR already computed have computed the wrong number. They divided rent by principal and interest. That is not our calculation and it is not close.
DSCR = gross rents ÷ PITIA of the subject property.
PITIA is principal, interest, taxes, insurance and association dues. Every component has a specified source:
- Principal and interest — computed at the note rate, not a qualifying rate and not a teaser.
- Taxes — from the title policy or a current real estate tax bill, converted to a monthly figure.
- Insurance — the premium on the approved insurance certificate or other documentation, converted to a monthly figure.
- Association fees — the monthly amount shown on the appraisal or a current homeowner association statement.
If the loan carries the 10-year interest-only option, the ratio may be calculated on ITIA — interest, taxes, insurance and association dues, with principal removed. That helps the ratio materially, and the program charges for it: interest-only carries its own higher DSCR floor, covered below.
Where the rent number comes from
On a purchase, we obtain Appraisal Form 1007 and use 100% of the gross market rent.
On a refinance, we obtain both a current lease agreement and Form 1007, and the qualifying rent is the lesser of the two — with one narrow exception where the signed lease runs above appraised market rent. That exception has a hard ceiling and its own rules; it is covered in full in lease rent above market rent on a DSCR loan.
Short-term rental income does not enter the calculation at face value — it is discounted before it reaches the numerator. That mechanic is covered in how lenders discount Airbnb income on a DSCR loan.
What the sub-1.00 tier costs beyond LTV
Getting into the 0.75-to-0.99 band is not simply a matter of accepting a lower LTV. Two other things change.
Reserves double. At DSCR 1.00 or above, the requirement is 3 months of PITIA for the subject property. Below 1.00, it is 6 months of PITIA.
Those reserves have to be real. Gift funds are not permitted to meet the reserve requirement. Funds used for down payment and closing costs cannot be counted twice as reserves. Liquid assets are verified prior to funding, and where multiple borrowers and guarantors are combining assets, the accounts are verified at approximately the same time so the same dollars are not counted in two places. Cash-out proceeds may be used for reserves only where FICO exceeds 700.
Occupancy tightens. On a refinance or cash-out where the DSCR is below 1.00, the occupancy test is stricter than the standard one. That test — and the separate 5% LTV reduction that applies to unleased long-term rentals on any refinance — is set out in how many units must be occupied for a DSCR refinance and, for a property with no tenant at all, in a DSCR loan on a vacant rental property.
Who cannot use the sub-1.00 tier at all
A DSCR below 1.00 is not permitted for three categories, regardless of how good the rest of the file looks:
1. Inexperienced investors.
2. Vacant properties. For a 2-4 unit property, at least 50% occupancy is required.
3. Portfolio loans.
The inexperienced investor overlay
This is the overlay that surprises people most, because "inexperienced" is a defined term and it is narrower than it sounds.
An experienced investor is a borrower or primary guarantor who either:
- has a history of owning and managing commercial or non-owner-occupied residential real estate for at least 12 consecutive months in the most recent three years, or
- has had ownership in three or more properties, each for at least twelve months, over the past 24 months.
Anyone who does not meet one of those two definitions is an inexperienced investor. Inexperienced investors are permitted — but on a distinctly tighter box:
| Inexperienced investor overlay | Requirement |
|---|---|
| Minimum DSCR | 1.00x |
| Maximum LTV / LTC | 75% |
| Maximum loan amount | $1,000,000 |
| Primary residence | Must currently own one for at least one year |
| Blanket mortgages | Not permitted |
| Short-term rental qualifying | Not permitted |
Separately, first-time homebuyers are not eligible for the program at all — defined as a borrower who has not owned a residential property at any time during the prior three years.
The overlays that push the floor above 1.00
Sub-1.00 eligibility is the exception. More commonly the question is not "how low can I go" but "why is my floor higher than 1.00." These are the specific triggers in our program.
| Trigger | Minimum DSCR |
|---|---|
| Loan amount below $150,000 | 1.25x |
| Short-term rental qualifying | 1.25x |
| Interest-only | 1.10x |
| Short-term rental with interest-only | Program minimum plus 0.10, qualified on ITIA |
| 2-4 unit property with FICO 740 or below | 1.00x |
| Inexperienced investor | 1.00x |
| Cash-out, property owned more than 6 months and less than 1 year | 1.00x |
| Portfolio / multiple-property loan | 1.00x |
Several of those deserve a sentence each.
Small loans carry the highest floor in the program. A loan below $150,000 requires 1.25x. The fixed costs of servicing a small balance do not shrink with the loan, and the program prices that in as coverage rather than as a rate adjustment.
Short-term rentals require 1.25x and cap at 60% LTV on all standard and cross-collateralized transactions using short-term rental income to qualify. They also carry an additional 6 months of PITIA reserves on top of the base requirement — the full reserve stack for a short-term rental file is covered in reserves required for a short-term rental loan. On a 2-4 unit, the property is deemed a short-term rental if 50% or more of the units are being used as short-term rentals, which means one Airbnb unit in a duplex converts the whole file. Inexperienced investors may not qualify via short-term rental income at all.
The 2-4 unit credit trigger is easy to miss. A 2-4 unit property with a FICO of 740 or below requires DSCR at or above 1.00 — which means the sub-1.00 grid is functionally unavailable on small multifamily unless the guarantor's middle score is above 740. Combined with the matrix restriction that 660-score borrowers are limited to one-unit properties, unit count is doing more work on the DSCR floor than most borrowers expect.
Portfolio loans work differently
On a portfolio or multiple-property loan the minimum DSCR is 1.0 and sub-1.00 is not permitted at the loan level. But individual properties inside the cross may run lower — and the program prices that: if more than 25% of the properties included in the portfolio have individual DSCRs between 0.75 and 0.99, the maximum LTV is reduced by 10%.
Portfolio loans also require a minimum of 3 properties, a minimum asset value of $100,000 per property, a maximum asset value of $1.5M per unit, and an experienced investor. Up to 25 properties can be combined into a single loan.
A worked illustration
The figures below are invented for illustration. They are not a quote, not a rate sheet, and not an indication of terms on any file.
Assume a purchase of a single-family rental. Market rent per Form 1007 is $2,400. The borrower has a 700 middle score, is an experienced investor, and wants a $400,000 loan.
At an assumed note rate, principal and interest run $2,150. Taxes are $310 a month, insurance $95, no HOA. PITIA is $2,555.
DSCR = $2,400 ÷ $2,555 = 0.94x.
The borrower's own math — $2,400 ÷ $2,150 — produced 1.12x, and they arrived expecting 80% LTV. The real result lands in the 0.75-to-0.99 grid: maximum 75% LTV on a purchase at that credit and loan tier, and 6 months of PITIA in reserves rather than 3. That is roughly $20,000 more down and about $7,700 more verified liquidity than the borrower had planned for.
The file is approvable. It is simply a different file than the one the borrower thought they had — and the gap opened entirely because of what sits inside PITIA.
Why there is genuinely no single floor
Everything above resolves into one point. The minimum DSCR on a given file is the highest applicable floor among:
- the base grid floor (0.75 if the sub-1.00 grid is open to you, otherwise 1.00),
- any overlay triggered by loan size, rental strategy, amortization type, unit count, credit or experience,
- and whatever the LTV you are asking for permits at your credit tier.
Those interact. A 705-score experienced investor buying a $600,000 single-family long-term rental at 70% LTV has a floor of 0.75x and real room to work with. The same borrower buying a $140,000 duplex to run as a short-term rental has a floor of 1.25x from the loan amount, 1.25x from the short-term rental treatment, and a 1.00x floor from the 2-4 unit credit trigger — the binding constraint is 1.25x, plus a 60% LTV cap and six extra months of reserves.
Same borrower. Same program. Same day. The floor moved by half a turn because the property and the strategy changed.
What this page does not do
This page explains how the minimum DSCR is determined on our 1-4 unit investor program under V28. It is not an approval, not a pre-qualification, and not a quote. Nothing here commits us to terms.
It does not price your loan. The eligibility matrices above govern maximum LTV; they say nothing about rate, points, or the prepayment penalty structure, all of which are separate.
It does not cover the full occupancy, vacancy or lease-documentation rules, the short-term rental reserve stack, or the appraisal and rent-survey requirements in detail — those live in the linked pages above.
It does not address property-condition, insurance adequacy, flood, condominium warrantability, or the geographic areas where the program is unavailable. Those are separate eligibility gates and a file can pass every DSCR test and still fail one of them.
It does not answer legal, tax, zoning or short-term-rental permitting questions. Whether your municipality allows the rental use you are underwriting to is a question for the municipality and your attorney, not for us — and the program requires that all loans be originated in accordance with federal, state and local regulations and restrictions pertaining to short-term rentals.
Finally, it does not substitute for running your actual numbers. Bring the note rate, the tax bill, the insurance quote and the HOA statement, and the DSCR stops being an estimate.
Guideline DSCR V28 · Reviewed September 1, 2026
Published December 31, 2025 · Updated September 1, 2026
How to use this guide
This article is educational guidance, not an offer or commitment to lend. Rules, property facts, credit, leverage, documentation, and full underwriting still control any actual scenario.