DSCR Loan when the rent fails to cover
Low DSCR loan: financing a rental that comes in under 1.0
A DSCR under 1.0 doesn’t kill the deal.
We finance investment properties when the rent doesn’t cover the payment (a DSCR under 1.0) for both purchase and refinanes.
And before we accept that a property is below 1.0, we check all scenarios especially which payment the lender used, because many properties that fail on the fully amortizing payment clear 1.0 on interest-only. Another feature of our DSCR loans.
Edited by: Marcos Zambrano, President & Owner NMLS #988935 · Andes Mortgage LLC NMLS #2187991 · Updated September 3, 2026
What a DSCR below 1.0 actually means for your loan
DSCR is simply the property’s gross rent divided by its housing expense:
DSCR = gross monthly rent ÷ monthly housing expense
A debt coverage ratio of 1.0, the rent exactly covers the payment – the property “breaks even” on a monthly basis. That’s good.
When the debt coverage falls below 1.0, that’s when problems begin to arise. On paper, the property is losing money every month. Most lenders see this and decline the file right away.
On a DSCR loan — where the property’s income qualifies the mortgage instead of your personal income — a figure under 1.0 doesn’t mean “declined” with Andes. It means the loan gets structured more conservatively: a bit less leverage, more reserves, and pricing that reflects the tier.
The catch is that the figure itself isn’t fixed. It depends on how the lender calculated the payment — and that’s the first thing we check.
We’ll run the numbers for you: Take Mortgage Match and see what you qualify for.
First, we check whether you're actually below 1.0
DSCR compares rent to a payment — but which payment isn’t standardized. Some programs test against the fully amortizing payment (PITIA: principal, interest, taxes, insurance). Others test against the interest-only payment (ITIA), which drops the principal. On a low-ratio property, that single difference routinely crosses the 1.0 line — and we know which of our programs calculate it which way.
Here’s the same rental, renting for $2,400/month, run both ways:
The way most lenders run it
0.87
“Below 1.0.” Reduced line, higher reserves — or a flat decline.
The way we can run it (ITIA)
Clears 1.0. Full line for the program — same property, same rent.
This is the first thing we do for you
When you send us a property, we run it against the programs that calculate DSCR the most favorable defensible way for your file — not whichever one a single bank happens to use. If an interest-only draw gets you a full tier higher, that’s the structure we’ll build. Figures above are illustrative; your exact numbers depend on rate, taxes, and insurance.
How Andes Mortgage tiers a property with a DSCR below 1.0
If the property is genuinely under 1.0 even on interest-only, it isn’t declined — it’s tiered. On a DSCR loan, the tier sets your maximum LTV, your reserves, and your pricing.
DSCR ≧ 1.00
Full line for the program. Shown for reference — this is the tier we’re working to reach for you.
0.75 – 0.99
LTV trimmed from the standard ceiling and pricing adjusted. The most common “below 1.0” tier.
Below 0.75
Lower LTV, more reserves, and cash-out often capped. Below most floors, we look at a no-DSCR-minimum program instead.
A property at 0.95 gives up a few points of leverage. One at 0.70 gives up more and has to carry a year of reserves — which is exactly the point where our no-ratio program tends to beat it. More on that below.
Why a strong property still comes in below 1.0
In our experience, a low DSCR is rarely a bad property — it’s a timing or market mismatch. The ones we see most:
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Event
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Why it pushes DSCR down
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|---|---|
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High-cost market
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Coastal and appreciation markets have low rent-to-price ratios — strong equity, thin monthly coverage
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Recent purchase at today's rates
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A payment set at current rates runs high relative to an existing lease
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Below-market rent
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A long-term tenant paying under market drags the rent figure down
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Insurance or tax spike
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Rising premiums in some states inflate the payment side faster than rent grows
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Own the rental already and want to tap equity instead?
This page is about financing the property — buying it or refinancing it. If you already own a rental that runs below 1.0 and you want to pull equity out of it rather than replace the loan, that’s a different product: a DSCR HELOC below 1.0.
How we get your property over the line
We are honest about this: a file with a DSCR of at least 1.0 is going to get the better rates and terms. Before we place in our below 1.0 tier, these are the moves we make to get you over the hump:
Qualify on the interest only-payment
If a program tests on PITIA and an interest-only payment is available, we switch the calculation — and that alone can move you a full tier.
Order a market rent appraisal (Form 1007)
If your lease is under market, we can use the appraiser's supported market rent instead — lifting your qualifying income without you touching the property.
Buy the rate down
Points lower the P&I portion of the payment, which lifts your DSCR. On a property near the line, a modest buydown is often all it takes.
Increase the down payment (lowers the LTV)
A bigger down payment will reduce your loan amount and therefore, reduce the monthly principal and interest. That might be a solution to get the debt coverage ratio over the line.
Structure your reserves
Reserves don't change your DSCR, but the lower tiers require more of them. We'll tell you upfront what you'll need on hand so there are no surprises at underwriting.
Move to a no-DSCR-minimum program
When the property is genuinely too low even interest-only, a no-ratio DSCR loan removes the coverage requirement entirely. That's the fallback, below.
If none of the solutions can get the property to a workable tier, a no-ratio DSCR loan removes the coverage test from the equation.
The property’s cash flow stops mattering; qualification rests on credit, equity, and reserves instead.
The trade is leverage — expect a lower LTV and a higher credit and reserve bar — but for a property that simply doesn’t cover itself on paper, it’s often the difference between closing and not.
How do we put these numbers together? Our methodology
The ranges on this page reflect current wholesale guidelines across the multiple Non-QM and DSCR lenders we work with, reviewed as of September 2026. As a broker, we place your file with whichever of them fits it best — which is why we quote ranges here and your real number on a call.
We publish a figure only when two or more independent lender sources corroborate it, and we show it as a range rather than a single number. Individual programs land inside — and occasionally outside — every range shown. We don’t publish any one lender’s guidelines and we don’t name lenders.
- DSCR tier boundaries and line reductions are typical, not universal — lenders draw the lines differently
- Reserves are stated in months of PITIA on the subject property
- The ITIA vs. PITIA example is illustrative; your actual figures depend on rate, taxes, and insurance
- Everything here assumes an otherwise clean file with no recent credit events, and nothing on this page is a commitment to lend or a guarantee of approval
Program terms and eligibility vary by lender and are subject to change without notice. Figures shown are typical market ranges as of the date above, not a commitment to lend. DSCR and no-ratio DSCR are business-purpose loans for investment properties. Andes Mortgage LLC, NMLS #2187991. Equal Housing Lender.
Frequently asked questions
Can I get a DSCR loan when the debt coverage is below 1.0?
Yes — we do it regularly. A DSCR between 0.75 and 0.99 typically qualifies at a a reduced loan-to-value or pricing hit. Below 0.75, we’ll usually look at our no-ratio program instead. Before anything, we check whether your DSCR was calculated on the interest-only or fully amortizing payment, because that alone can move you above 1.0.
What's the lowest DSCR you'll work with?
There’s no single floor. We place low-ratio files with reduced leverage and higher reserves, and for properties that stay too low, our no-ratio HELOC removes the DSCR requirement altogether in exchange for roughly 10 points less line. Send us the property and we’ll tell you where it lands.
What is a no-ratio DSCR loan?
A no-ratio DSCR loan is when we look past at rents to qualify the property. No income documentation is needed for this program.
How is DSCR calculated — with which payment?
Either the fully amortizing payment (principal, interest, taxes, insurance) or the interest-only payment (interest, taxes, insurance). Interest-only produces a higher DSCR because it drops the principal. Our programs differ, and we’ll run yours the most favorable defensible way for your file.
Does a market-rent appraisal help a low DSCR?
It can. If your lease is below market, a market-rent schedule (Form 1007) lets us use the appraiser’s supported market rent, which raises your DSCR without any change to the property. It’s one of the first levers we pull.
Don't stop here
DSCR for short term rentals and Airbnb
See how we help STR investors qualify for DSCR
Send us the property. We'll find the angle.
Give us your rental and its rent, and we’ll run it both ways, tell you the tier it lands in, and quote a low-ratio line and a no-ratio line side by side — so you can see exactly what Andes can put together before you commit to anything.
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