How Are Landlords Stress-Testing DSCR Deals in 2026?

Question

For those using DSCR loans, what assumptions are you stress-testing most — rent, taxes, insurance, or reserves? Curious how others are staying conservative.

Taylor Dasch · Answer

Great question. Right now, I’m placing the heaviest stress test on insurance premiums and property taxes, rather than just vacancy or rent dips.

In many markets, we've seen insurance rates jump 20-40% year-over-year, which can kill a DSCR ratio overnight if you’re barely scraping by at a 1.20. I’m now underwriting with a hefty buffer on the insurance line item—sometimes assuming a 15% annual increase for the first few years just to be safe.

For taxes, I never use the current owner's tax bill. I always recalculate based on the purchase price times the local millage rate, as that reassessment can be a nasty surprise. If the deal still pencils with those inflated expense numbers, then I feel comfortable moving forward.

Hope that helps!

How Are Landlords Stress-Testing DSCR Deals in 2026?

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