DSCR Borrowers: What’s the Lowest Ratio You’ve Ever Closed With?

Question

Some lenders stick to 1.20+ DSCR, but others allow lower with strong compensating factors. What’s the lowest DSCR you’ve actually seen funded?

Drago Stanimirovic · Answer

Appreciate everyone sharing real-world examples, this is where the discussion gets valuable. @Chris Seveney, I’ve seen the same: anything below 1.0 rarely gets over the finish line unless there’s serious skin in the game or a story that makes the lender comfortable. @Alex Bekeza, your detail on LLPAs tied to DSCR tiers is spot on and exactly what we're seeing across pricing matrices. @Erik Estrada, that .25 example is wild — definitely an edge case, but great reminder that commercial leases can dramatically shift the real coverage, even if they don’t help with qualifying.

In today’s market, creativity and compensating factors carry weight, but the underwrite still needs to make sense. Lenders are still funding below 1.0 in certain cases, but you're paying for the risk.

Let’s keep the conversation going, always something to learn in this space.

In today’s market, creativity and compensating factors carry weight, but the underwrite still needs to make sense. Lenders are still funding below 1.0 in certain cases, but you're paying for the risk.

Let’s keep the conversation going, always something to learn in this space.

Erik Estrada · Answer

The lowest I have seen is .25% .... LOL. But that was because this investor leases the property to a commercial tenant. Traditional DSCR lenders will only look at short term and market rents.

Rate was high, but with the commercial lease, the actual DSCR was about 1.7x

Alex Bekeza · Answer

Down to 0.75x at 65% LTV max w/ a .750% rate llpa

or

Down to 0.8x at 70% LTV max w/ a 0.375% llpa

but

The products that require 1.0 (Qualifying Rent/PITI) are the lionshare of deals although there's a small LLPA for falling below 1.15 in most cases

Chris Seveney · Answer

1.0

some offer as low as .8 but never seen any get funded.

DSCR Borrowers: What’s the Lowest Ratio You’ve Ever Closed With?

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