How Much Down Payment Do You Need for a DSCR Loan?
DSCR loans require at least 20% down on a purchase (80% LTV), or 25% down for a short-term rental because of the 5% LTV reduction. Putting 25% or more down often prices better, and 30% down (70% LTV) typically lands the best DSCR rate tier. On top of the down payment, plan for closing costs — lender fees, the appraisal with a rent analysis, title and escrow, and prepaid taxes and insurance — plus liquid reserves after closing.
Key Facts
Minimum Down Payment
The minimum down payment for a DSCR purchase is 20%, which is 80% LTV. Short-term rentals carry a 5% LTV reduction, so plan on at least 25% down for an Airbnb or VRBO property — see DSCR loans for short-term rentals. Cash-out refinances go up to 75% LTV.
Why More Down Can Pay Off
DSCR pricing improves in LTV tiers. 25% down often prices better than 20%, and 30% down (70% LTV) typically reaches the best DSCR rate tier. A bigger down payment also lowers the monthly payment, which raises your DSCR — useful when the rent only just covers PITIA. Compare scenarios in the DSCR calculator.
What Closing Costs to Expect
DSCR closing costs fall into the same buckets as any purchase: lender fees (origination and any discount points), the appraisal — which includes a 1007 market rent analysis on DSCR loans — title insurance and escrow, recording fees, and prepaid items like property taxes, homeowners insurance, and interest. If you close in an LLC, expect the lender to review your entity documents. For a line-by-line breakdown, see understanding closing costs in Oregon and California.
Reserves on Top of Cash to Close
Lenders also want liquid reserves left over after closing — cash or investments that could cover the payment through a vacancy. Reserve requirements vary by program and loan size. Strong reserves are what open up sub-1.0x ratios (down to 0.75x with 700+ credit) and interest-only options.
Ways to Lower Your Cash to Close
A prepayment penalty can buy down the rate — a 3-year step-down penalty typically prices 25 to 50 basis points below a no-penalty option, which makes sense if you plan to hold. Seller credits toward closing costs may be possible within program limits. And if you own a property with equity, a DSCR cash-out refinance can fund the down payment on the next one.
Where the Down Payment Can Come From
Down payment and reserves must be documented in your bank, brokerage, or retirement accounts — but your personal income is not documented. Proceeds from a cash-out refinance on another property can also be used. For the rest of the qualifying rules, see the full DSCR loan requirements.
Real Estate Attorney Referral
Building a portfolio? An LLC + lease attorney is non-optional.
DSCR loans, LLC vesting, multi-state portfolios, and tenant-protection compliance all create legal exposure that's far cheaper to address before the first acquisition than after. We can introduce you to OR/CA real estate attorneys who specialize in investor entity structuring and rental compliance.
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From the Blog
Further Reading
ResidentialTurn Your Free-and-Clear Costa Mesa Property Into a Lake Tahoe Investment with a DSCR Cash-Out Refinance
How a DSCR cash-out refinance lets you unlock dormant equity fast — with interest-only flexibility — and use those proceeds to buy a cash-flowing vacation condo in Lake Tahoe.
InvestmentMaximizing DSCR and Cash Flow with Interest-Only Payments: A 2026 Six-City Comparison (Portland, Eugene, Sacramento, San Francisco, Los Angeles, Orange County)
Interest-only payments on a 40-year DSCR loan can lift your debt-service coverage ratio by roughly 0.13–0.15 and add hundreds of dollars per month in cash flow — sometimes flipping a deal from negative to positive. Here is what the math looks like at 2026 median price points across six West Coast investor markets, modeled at 30% down (70% LTV) which is the sweet spot for best-tier DSCR pricing.
ResidentialUnderstanding Closing Costs in Oregon & California: Seller-Paid Limits, Minimum Borrower Contributions, and How to Use IPCs to Reduce Your Rate, Payment, and Cash to Close
Closing costs are one of the most misunderstood — and most negotiable — parts of buying a home. Every loan program has different rules about how much the seller can pay, what the buyer must contribute, and how seller credits can be strategically applied to buy down your rate, reduce your monthly payment, or minimize the cash you need at the table. Here's the complete guide for Oregon and California buyers.