Financing Strategies/Ideas involving DCSR

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Financing Strategies/Ideas involving DCSR

Calvin GittensPro Member
Member since 2025 · 6 posts · 5 votes

I'm interested in buying a rental property but need financing ideas/strategies. The home is selling for $360,000 (which is a discount and a motivated seller, comps are around $420,000 plus) and I would like to use as a long-term rental or possibly a mid/short term rental. The property could rent for $2400-$2700/month. I was thinking about a DCSR loan, but I don't have the down payment required for the DCSR. Seeking help with options to make this happen.

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Devin PetersonBusiness Member
Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 689 votes
1d

Calvin, buying that far under comps gives you some options. A few ways investors usually bridge the down payment on a DSCR purchase:

Partner equity. A money partner brings the down payment for a share of the equity or cash flow. Most DSCR lenders are fine lending to an LLC with both of you on it, just expect both partners to be vetted.

Tap equity you already have. If you own a home or another rental, a HELOC or cash-out refi on it can fund the down payment, since most DSCR lenders accept borrowed funds as long as they're secured by another asset. If the other property is a rental, a DSCR HELOC is worth looking at too: it's a second-lien line some non-QM lenders offer that qualifies on that property's rent rather than your personal income/DTI, and it leaves your existing first mortgage and rate alone.

Short-term money first, DSCR later. Buy with hard money or private bridge financing, then refinance into a DSCR loan. Just know many DSCR lenders want some seasoning (often around 6 months, sometimes more) before they'll lend off the new appraised value instead of what you paid, so budget for carrying costs in the meantime.

Seller help. Seller credits are capped on DSCR loans and generally can only go toward closing costs, not the down payment. Seller carry-back financing can work with some lenders, but many don't allow it behind a DSCR first, so confirm before you write it into the contract.

One heads-up: gift funds aren't allowed by a lot of DSCR lenders, so don't count on that route without checking. And run your numbers at the low end of rent ($2,400) against the full payment including taxes, insurance and any HOA. That ratio drives your rate and how much down you'll need. If you're going the STR route, ask how the lender calculates income, since some use market data projections and others want a rental history.

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  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 689 votes
    1d

    Calvin, buying that far under comps gives you some options. A few ways investors usually bridge the down payment on a DSCR purchase:

    Partner equity. A money partner brings the down payment for a share of the equity or cash flow. Most DSCR lenders are fine lending to an LLC with both of you on it, just expect both partners to be vetted.

    Tap equity you already have. If you own a home or another rental, a HELOC or cash-out refi on it can fund the down payment, since most DSCR lenders accept borrowed funds as long as they're secured by another asset. If the other property is a rental, a DSCR HELOC is worth looking at too: it's a second-lien line some non-QM lenders offer that qualifies on that property's rent rather than your personal income/DTI, and it leaves your existing first mortgage and rate alone.

    Short-term money first, DSCR later. Buy with hard money or private bridge financing, then refinance into a DSCR loan. Just know many DSCR lenders want some seasoning (often around 6 months, sometimes more) before they'll lend off the new appraised value instead of what you paid, so budget for carrying costs in the meantime.

    Seller help. Seller credits are capped on DSCR loans and generally can only go toward closing costs, not the down payment. Seller carry-back financing can work with some lenders, but many don't allow it behind a DSCR first, so confirm before you write it into the contract.

    One heads-up: gift funds aren't allowed by a lot of DSCR lenders, so don't count on that route without checking. And run your numbers at the low end of rent ($2,400) against the full payment including taxes, insurance and any HOA. That ratio drives your rate and how much down you'll need. If you're going the STR route, ask how the lender calculates income, since some use market data projections and others want a rental history.

    [email protected]860-538-3672
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    • Nicholas L.Pro Member
      Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
      9h

      @Devin Peterson

      Hi Devin. Some of your posts are pretty good. But did you read the original post here? A new investor says he doesn't have the down payment for a property where, if he did, he'd lose money. The response there is not to recommend that he borrow the down payment. That's insanity.

      0Reply
  • Ametria Chaney
    Realtor · Memphis, Shelby County · Member since 2026 · 362 posts · 128 votes
    1d

    Hi Calvin, welcome — and smart to check the financing before you fall in love with the deal. A DSCR loan can be a great fit for a rental, but most DSCR lenders want around 20-25% down, so the down payment is the real hurdle here, not the loan itself. A few options to talk through with a lender: ask the seller about a credit toward your closing costs, see whether living in the home for a year as a house hack could open up a lower-down-payment conventional loan, or consider bringing in a partner who puts up the down payment while you manage the deal. Before any of that, run the numbers on the rent you quoted — $2,400 to $2,700 a month against a $360,000 price, plus taxes, insurance and vacancy. If it only works at the top of that range, be honest with yourself about it. What market is the home in?

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    • Calvin GittensPro Member
      OP
      Member since 2025 · 6 posts · 5 votes
      1d

      Thank you for the info! The home is in coastal east central Florida (near Melbourne, FL).

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  • Calvin GittensPro Member
    OP
    Member since 2025 · 6 posts · 5 votes
    1d

    Thank you for that comprehensive information! I think I'll explore the hard money option, and possibly HELOC on my residential home.

    0Reply
  • Christian Leon
    Lender · Miami, FL · Member since 2026 · 15 posts · 4 votes
    1d

    Honestly I'd run the DSCR math before worrying about the down payment, because at $360K it's tight. At 75% LTV you're borrowing $270K, and at around 7.5% that's roughly $1,890 a month in principal and interest before taxes and insurance, so you're probably close to $2,500 all in. That's about a 1.0 DSCR at $2,500 rent, which some lenders will do but usually with a higher rate or more reserves. fwiw the $60K discount mostly doesn't help you at purchase since lenders size off the lower of price or appraisal. Where it pays off is buying with short term money and refinancing off the appraised value after seasoning, so check that the rent still covers the payment on that bigger loan.

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  • Irv ArreolaPro Member
    Lender · Los Angeles CA · Member since 2026 · 64 posts · 11 votes
    1d

    The discount to comps is real equity, but on a purchase most lenders size the loan off the price, so that spread helps you more on the back end than at closing.

    With rent around $2,400 to $2,700 on $360K, it comes down to whether the rent covers the new payment at the LTV you can put down, and that ratio is going to be tight. Does the house need any work, or is it rent ready as is?

    [email protected]424-599-0402
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  • Ryan BakerBusiness Member
    Lender · Strongsville / Cleveland, OH · Member since 2026 · 158 posts · 39 votes
    1d

    Calvin, the others covered the main routes, so one addition: before you chase the down payment, get the rent verified against the full payment (principal, interest, taxes and insurance) at the leverage you'd actually put down. At $2,400-$2,700 on a $360K price that coverage ratio will be tight, and it decides how much the lender will let you borrow, so it's worth knowing before you line up a partner or HELOC funds. If it doesn't clear, a short-term purchase loan and a refinance after it's rented can still work.

    Happy to walk through the numbers with you, give me a call (my number's in my signature below).

    – Ryan

    [email protected]330-548-3340
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  • Ty Burns
    Lender · Salt Lake City, UT · Member since 2013 · 153 posts · 23 votes
    1d

    I'd separate the discount from the cash needed to close: a lender may size the purchase loan from the contract price, so the comp spread often helps later more than at closing. Before choosing a funding route, verify the $2,400 low-end rent against taxes, insurance, vacancy and any HOA, and get a firm coastal Florida insurance quote. If the down payment is the only gap, compare bringing in a partner or using equity from another asset with short-term financing, but make sure the refinance path and carrying reserves are realistic before you commit. For an STR, confirm how the lender will document income and check local rules before underwriting a premium. Happy to look at the numbers if you want to message me.

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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    1d

    @Calvin Gittens

    Hi Calvin - this is not a deal, you will lose money at that rent. And no one offers equity for fun - if it's less than comps it likely needs work. Next

    0Reply
  • Nyisha Walton
    Lender · Houston, TX · Member since 2026 · 133 posts · 40 votes
    1d

    A $360K buy with comps near $420K in the Melbourne area is a nice spot to be in, Calvin. Coming up short on the DSCR down payment is really common, and there are a few ways around it. Shoot me a message and we can go over options.

    0Reply
  • Muyees Ayilara
    Lender · Boynton Beach, FL · Member since 2026 · 240 posts · 110 votes
    1d

    Calvin, good find buying at $360k when comps are around $420k, that helps you on equity, but it does not really help you with the DSCR down payment. The lender is still going to look at the rent vs the payment. At $2400 to $2700 rent, you need to run the numbers well, because most DSCR lenders want that rent to cover the payment. If it is tight, they will want more down or a higher rate.

    Apart from what Devin said about a partner, the other thing I see people do is ask the seller for a small seller credit or a second, or they bring a gap partner just for the down payment and refi them out after 6 to 12 months once it is seasoned. Just make sure any of that is disclosed to the lender upfront, if you hide it, it will kill the deal at closing.

    What is the tax and insurance looking like on that one? That is what usually changes the DSCR for people.

    1Reply
  • Sagi Gliksman
    Lender · Indianapolis · Member since 2025 · 26 posts · 7 votes
    1d

    Just keep in mind that on a purchase, a DSCR lender will base their loan on the $360k purchase price, not the $420k comp value, so you will still need 15% to 20% down plus closing costs out of pocket. Most lenders also underwrite to standard long-term market rents using an appraiser's rent schedule, even if you plan to do short or mid-term, so make sure ordinary rent covers the debt service at today's rates. If it needs rehab to actually hit that higher value, you'd likely need to buy it with a short-term bridge loan first and then refinance into a 30-year DSCR loan once it's stabilized.

    0Reply
  • Noah WrightBusiness Member
    USA, Nationwide · Member since 2024 · 414 posts · 139 votes
    1d

    Lining up hard money and checking the equity in your residence is the right instinct, Calvin, and buying under comps gives you some room to work with. The part to run now is the refinance exit, because that's where the hard money gets paid off. If it appraises near $420K, 75 percent of that is a bigger loan than the $270K that already sits around a 1.0 DSCR at this rent. The programs I see make the new loan clear their minimum DSCR as well as the LTV limit, so a higher appraisal doesn't automatically turn into cash back. On a refinance the rent usually caps the loan before the value does. How much cash could you bring in on your own?

    [email protected]737-773-3717
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  • Jiao Liu
    Lender · Houston, TX · Member since 2026 · 60 posts · 16 votes
    1d

    Hi Calvin — Jiao Liu, Eirvale Financial Services. I lend on DSCR purchases nationwide, including Florida.

    Quick honest take on your numbers before the down payment question: at $360K with rent at $2,400–$2,700, the coverage is going to be tight either way you slice it. On a straight DSCR purchase at 75% ($270K), principal and interest alone runs about $1,890/mo at current rates, so taxes and insurance decide whether this clears a 1.0 ratio — and coastal Florida insurance is exactly the number that makes or breaks it. The hard money route you mentioned faces the same test on the refinance side, so it's worth pinning the real numbers down first either way.

    If you want, send me the following and I'll run the actual math on both structures — the straight DSCR purchase and a hard money buy with a DSCR refinance exit — with real numbers, not guesses:

    1. The property address

    2. Annual property taxes and annual insurance (a current quote is fine)

    3. Your credit score range

    4. Whether you'd buy in your own name or an LLC

    5. Roughly how much cash you can bring to closing (a range is fine)

    6. How much you'd like to borrow

    7. Whether the home is rent-ready as is, or needs work — and if it needs work, your rough rehab budget

    With that I can tell you exactly where each route lands.

    0Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    23h

    Hey Calvin,

    Sounds like a bridge loan would work. There are no prepayment penalties on a bridge, so you can cash out at the $420k value after 90 days seasoning.

    [email protected]818-269-7983
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  • BJ Everson
    Realtor · Columbus, Franklin County · Member since 2026 · 155 posts · 60 votes
    21h

    Calvin, one thing to check before you line up the down payment: on a DSCR purchase the lender usually relies on the appraiser's market rent, not your estimate, and sizes the loan off the lower of price or appraised value. So run it three ways: rent at $2,400, a full PITIA payment using real insurance quotes (wind and flood matter on the coast), and the payment on a HELOC if that's where the down payment comes from. If it only works at $2,700 or as a mid- or short-term rental, ask the lender up front whether they will count that income without a rental history, and what changes in rate or reserves if they won't. The discount to comps is real equity, but it mostly shows up later at a refinance or sale, so the monthly numbers have to work at today's price.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    20h

    Let me give you upfront advice versus all these other AI-generated responses. The house won't cash flow. It doesn't matter where the money comes from. That's not a good return, and the numbers don't work, so move on.

    7e investments53 Reviews
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  • Divin KanyamaBusiness Member
    Accountant · Seattle, WA · Member since 2025 · 700 posts · 295 votes
    18h

    Nice find, @Calvin Gittens ! A motivated seller gives you options. Ask about seller financing or a seller credit toward closing costs, but check with your lender first since many don't allow a seller-funded second loan.

    Other ways to cover the down payment: bring in a partner with cash while you handle the deal and management, use a HELOC or cash-out refi on a property you already own, or find private money. Just make sure the deal still cash flows with the extra payments.

    Also run the numbers first. Rent of $2,400 to $2,700 on $360k is about 0.67% to 0.75%, so a DSCR loan may barely hit 1.0 once you include taxes, insurance and today's rates. Confirm the comps and the post-purchase property tax too. Good luck!

    [email protected]
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  • Flores MarcusPro Member
    Investor · TX · Member since 2025 · 39 posts · 7 votes
    7h

    Zero down options are available. Let’s connect. I do have a lender whom we have used previously they offer flexible options. Let’s connect.

    0Reply
  • Amber Stout
    Lender · Tampa/Saint Petersburg, FL · Member since 2014 · 372 posts · 148 votes
    4h

    Hi @Calvin Gittens - investor and mortgage broker here - are you open to doing a house hack? If so, you only need 3-5% down for 1-4 unit property. Alternatively, if it's solely investment, you're looking at 15-25% down depending on if you're qualifying for conventional or DSCR. Do you have another home you can get a HELOC on and use that for the down payment? Do you have a family member that can give you the funds for the down payment? Do you have a partner that can give you the funds?

    I have a couple other ideas, happy to discuss further. If so, shoot me a DM.

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