DSCR loans in Texas
Buy or refinance investment real estate in Texas based on the property’s income – not your tax returns, W-2s or personal income.
Andes Mortgage is a mortgage broker with a large portfolio of DSCR loans in Texas. Built for investors buying long-term rentals in DFW and Houston, short-term rentals on the coast, and everything between.
- No tax returns · no personal DTI
- Non-warrantable condos eligible
- Below-1.0 DSCR options
- Licensed Texas Mortgage Broker
What is a DSCR loan in Texas?
DSCR stands for debt-service coverage ratio — the rent a property brings in divided by its full monthly payment (principal, interest, taxes, insurance, and any HOA, together called PITIA).
Because the loan qualifies on the property’s cash flow, a DSCR lender doesn’t ask for your W-2s, tax returns, or personal debt-to-income.
A DSCR of 1.0 means rent exactly covers the payment. Above 1.0, the property throws off surplus cash flow. In other words, debt service answers the question: can this property at least break-even, cash flow or loses money every month.
The reason Texas investors reach for this loan is simple: underwriting looks at the property, not you. DSCR loans don’t require tax returns, pay stubs, or a personal debt-to-income calculation. That matters most for self-employed investors, investors who write off heavily, and anyone scaling a portfolio of real estate rentals, both long-term and short-term.
Because it’s a business-purpose loan, a DSCR mortgage can close in an LLC, and there’s no cap on how many you hold. For a Texas investor building a rental portfolio, that’s the whole point.
DSCR = Monthly rent ÷ Monthly PITIA
Example: $2,400 rent on a $2,000 payment = 1.20 DSCR. The property covers its own debt with 20% to spare.
Andes Mortgage's DSCR program
These are the ranges we lend to across our current wholesale investor guidelines in Texas — synthesized into market ranges, not a single lender’s sheet, and not a commitment to lend. Your final terms depend on the property, your credit, and the deal.
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Parameter
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Andes Mortgage's DSCR Texas Guidelines
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Minimum credit score
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We work with as low as 640 credit score
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Max LTV — purchase (DSCR ≥ 1.0)
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Up to 85% for credit scores >700
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Max LTV — cash-out refinance
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Up to 75%
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DSCR 0.75–0.99 (reduced-ratio)
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Available — expect roughly a 5–10% LTV reduction vs. standard
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DSCR below 0.75 / no-ratio
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Available — typically to ~60–70% LTV at a higher credit score
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Loan amounts
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~$100K to $2.5M (minimum rises to ~$200K on sub-1.0 DSCR)
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Reserves
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3 months PITIA up to ~$1M; 6 months above ~$1M or on sub-1.0 DSCR
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Mortgage / rental history
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0x30x12 typical (no 30-day lates in 12 mo.)
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Property types
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SFR, PUD, townhome, 2–4 units, condos, and non-warrantable condos
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Rural property
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Allowed with up to 65% LTV
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Occupancy
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Business purpose / investment only
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What you need to know about DSCR loan pricing: DSCR rates run somewhat above a comparable owner-occupied loan — that’s the trade for skipping income documentation and qualifying a business-purpose property on its cash flow.
Points, prepayment-penalty options, and interest-only structures all move the number, so the right question is total cost over your hold period, not the headline rate. We’ll model a few structures side by side so you can see the trade-offs.
Figures are typical ranges from current wholesale lending guidelines — not a single lender’s terms and not a commitment to lend. Guidelines last verified: July 2026.
A sub-1.0 DSCR is not an automatic no
This is where Texas property taxes bite (more on that below) and where most national mortgage pages simply stop.
A property that doesn’t cover its own payment on paper — a DSCR under 1.0 — does not get rejected. It moves to a different tier of the same program, with a lower loan-to-value. There is no DSCR floor here.
The rent covers the payment. You’re on the main program — best LTVs, widest credit range, lowest pricing.
Rent falls a little short. Still fundable — expect roughly a 5–10% LTV reduction to offset the thinner coverage.
Cash flow isn’t the qualifier. A no-ratio structure leans on your down payment and credit — typically to ~60–70% LTV with a higher FICO.
If your Austin long-term rental has a DSCR of 0.9 falling slightly short of the 1.0 threshold because Collin County increased your tax bill once again, you still have a path. See exactly how the below-1.0 tiers work on our DSCR below 1.0 guide.
What makes Texas favorable — and what to watch
Texas gives rental investors a genuinely favorable backdrop — no state income tax, landlord-friendly rules, and steady demand. But one local feature quietly reshapes DSCR math. Here’s what works in your favor, and the number to watch
Texas doesn’t tax personal income, so more of your rental cash flow stays with you. For an investor comparing after-tax yields state to state, that’s a real structural edge.
Texas has a relatively fast, defined eviction process and few rent-control restrictions. Predictable operating rules make cash flow easier to model — which is exactly what DSCR underwriting rewards.
Sustained in-migration and job creation across the major metros keep rental demand climbing. Growing tenant demand supports the rents your DSCR is built on.
Texas has some of the highest property tax rates in the country — and property taxes are baked directly into the “T” in PITIA. Higher taxes mean a higher monthly payment, which mechanically lowers your DSCR on the exact same rent. A property that would clear 1.0 in a low-tax state might land at 0.9 in Collin or Fort Bend County. This is why the no-floor tiers matter so much in Texas specifically: the math pushes more Texas deals into the reduced-ratio band than investors expect. Model your DSCR with the actual tax bill, not a national average — our calculator below uses your real numbers.
How to tap into the equity of your Texas investment property
Three distinct ways we help our Texas real estate investors access the equity of their rental properties with DSCR.
Replaces your current mortgage with a larger amount than what you currently owe and you receive the difference in cash. Improve your interest rate if rates are lower than your current.
A Home Equity Loan allows you to tap into your equity with a fixed rate second mortgage. Your current loan terms are untouched and you access your equity with a fixed payment.
One of our most popular programs at Andes. This is a Home Equity Line of Credit that lets you tap equity with the flexibility of a revolving line. Use it when you need it and pay interest on the balance only.
Texas cash-out is different — and for investors, that's usually good news
Texas is the one state with cash-out rules written into its constitution. Section 50(a)(6) governs home equity lending on a Texas homestead — your primary residence. It caps total borrowing against a homestead at 80% of value, adds specific disclosures and a 12-day cooling-off period, and enforces the well-known “once a home-equity loan, always a home-equity loan” rule: once you take equity out of a homestead under 50(a)(6), future refinances of that property carry the restriction forward.
Here’s what most investors don’t realize: a true rental property is not your homestead.
A DSCR loan is a business-purpose loan on an investment property, so the 50(a)(6) homestead restrictions generally don’t apply. That means a Texas DSCR cash-out can often reach a higher effective LTV than a homestead owner is allowed on their own house — up to 75% on our program.
Where Texas investors actually get tripped up
The friction isn’t the cap — it’s proving the property is non-homestead. Texas underwriting is strict about homestead documentation, and two situations catch investors off guard:
Converting your old primary to a rental
If a property was ever your homestead and you pulled equity out under 50(a)(6), that restriction can follow the property even after you move out and rent it.
Multiple Texas properties
You can only claim one homestead. Investors who own several Texas properties need clean designation so the rental isn't mistaken for the homestead — or vice versa
Texas markets, tied to strategy
Texas isn’t one rental market — it’s several, and DSCR gets used differently in each. The strategy you’re running should drive the property you buy and the tier you qualify under.
- Long-term rentals — the metros
Dallas–Fort Worth. Corporate relocation and a deep job market keep tenant demand steady across Collin, Denton, and Tarrant counties. Bread-and-butter DSCR — SFR and small multifamily that hold near or above 1.0.
Houston. Energy, medical, and port employment drive one of the largest rental bases in the country. Strong for 2–4 unit deals.
San Antonio. Military and healthcare anchor demand; lower entry prices make it friendly for first-time DSCR buyers stretching a down payment.
- Short-term & vacation rentals
Austin. Tech, live music, and events drive nightly rates — but STR permitting is genuinely restrictive here. Confirm the property’s zoning before you underwrite it.
Galveston. Gulf-coast tourism and a mature STR market. Seasonal income swings mean off-season DSCR can dip below 1.0 — plan for the reduced-ratio tier.
South Padre Island. Vacation-driven demand with strong summer rates. STR rules vary by municipality, so verify local ordinances first.
Short-term rental terms are stricter than long-term: expect a higher minimum DSCR (around 1.15), a higher FICO, and an LTV reduction. STR permitting varies city to city across Texas — always confirm the local rules for the exact address before you count on nightly income.
Texas DSCR calculator
Enter the property’s rent and payment. We’ll tell you the DSCR and the tier you land in. No email required to see your result.
DSCR Loan Qualifier
Does this deal qualify?
We originate DSCR loans in 46 states nationwide.
Prefer the full calculator? Open the DSCR loan calculator. Already own Texas rentals? A DSCR HELOC taps the equity, and a DSCR cash-out refinance pulls it out at up to 75% LTV.
texas dscr questions
Frequently asked questions
Can I get a DSCR loan in Texas with a 640 credit score?
Yes. Our Texas DSCR program starts as low as 640. Your credit score influences your maximum loan-to-value — the strongest terms, including up to 85% LTV on a purchase, are reserved for scores above 700 — but 640 gets you in the door.
What's the maximum LTV on a Texas DSCR loan?
Up to 85% on a purchase for borrowers with credit above 700, and up to 75% on a cash-out refinance. Reduced-ratio and no-ratio deals (DSCR under 1.0) carry lower LTV caps — roughly a 5–10% reduction in the 0.75–0.99 band, and typically 60–70% below 0.75.
My Texas rental doesn't cover its payment. Am I disqualified?
No. There’s no DSCR floor. A DSCR between 0.75 and 0.99 moves to a reduced-ratio tier with a modest LTV reduction; below 0.75, a no-ratio structure qualifies you on down payment and credit instead of cash flow. Given Texas’s high property taxes, more deals land under 1.0 than investors expect — and they still fund.
Does Texas Section 50(a)(6) affect my DSCR cash-out?
Usually not. Section 50(a)(6) governs cash-out on a homestead — your primary residence. A true investment property isn’t a homestead, so a DSCR cash-out generally isn’t bound by the 80% homestead cap and can reach up to 75% LTV. The exception is a property with homestead history — such as a former primary residence you’ve converted to a rental. We check that before we structure the loan.
Do high Texas property taxes hurt my DSCR?
They can. Property taxes are part of PITIA, so higher taxes raise your monthly payment and lower your DSCR on the same rent. Always model with the actual county tax bill rather than a national average — our calculator uses your real figures so there are no surprises.
Can I close a Texas DSCR loan in an LLC?
Yes. DSCR loans are business-purpose loans and can close in an LLC, which is how most Texas investors hold rental property. There’s also no limit on the number of DSCR loans you can hold — a key advantage as you scale past conventional financing’s property caps.
Can I use a DSCR loan for a short-term rental in Austin or Galveston?
Yes, with stricter terms — typically a minimum DSCR around 1.15, a higher FICO, and an LTV reduction versus a long-term rental. Because STR permitting varies by Texas city (Austin in particular is restrictive), confirm the property’s local zoning and permit status before you rely on nightly income.
Related pages
See if your Texas deal qualifies
Answer a few questions and we’ll match your property to the right DSCR structure — including the sub-1.0 tiers most lenders won’t tell you about. No credit pull to start.
Andes Mortgage LLC — NMLS #2187991. Marcos Zambrano, MLO NMLS #988935.
Program terms shown are typical ranges synthesized from current wholesale lending guidelines — they are not a single lender’s terms and not a commitment to lend. All loans subject to underwriting approval, credit, income (where applicable), property, and collateral requirements.
DSCR loans are business-purpose loans for non-owner-occupied investment property only. Guidelines last verified: July 2026, and may change without notice. Content regarding Texas Section 50(a)(6) and homestead rules is general education, not legal advice; consult qualified counsel for your specific situation. Equal Housing Lender.