Most DSCR loans require 20–25% down on a purchase, which means 75–80% loan-to-value. A few programs go to 15% down for borrowers with strong credit and a strong ratio, while a DSCR below 1.0, a condo or condo-hotel, or a large loan commonly pushes the requirement to 25–30% or more. On top of the down payment, plan for closing costs and several months of reserves.
That second sentence is where investors get caught. The down payment is the number everyone quotes, but the lender is really asking a bigger question: how much verified cash do you have, all in? Here is how to figure out your number before you write an offer.
What decides your DSCR down payment?
Lenders price DSCR loans on a grid. Four things set your row on it:
- Credit score. The biggest lever. With many lenders, scores around 720 and up open the highest leverage (commonly 80% LTV, or 20% down), while scores in the 600s often cap you around 70–75% LTV.
- The DSCR itself. A ratio at or above 1.0 gets standard leverage. Below 1.0, programs that allow it commonly cap LTV at 70–75%. More on what DSCR ratio you need here.
- Property type. Single-family homes get the best leverage. Condos, 2–4 units, and short-term rentals are often a notch lower with some lenders, and condo-hotels lower still.
- Loan size. Larger loans, often somewhere above $1–2 million depending on the lender, usually come with lower maximum LTV.
These stack. A 680 score on a 0.95-ratio condo is going to need a lot more down than a 760 score on a 1.30-ratio single-family home.
Typical down payments by scenario
These are common market ranges, not program terms. Every lender draws its own lines.
| Scenario | Commonly required down |
|---|---|
| Single-family, strong credit, DSCR 1.0+ | 20–25% (15% with a few programs) |
| Single-family, credit in the 600s | 25–30% |
| 2–4 units | 20–25% |
| Warrantable condo | 20–25% |
| Short-term rental | 20–25% |
| DSCR below 1.0 or no-ratio | 25–30% |
| Condo-hotel / non-warrantable condo | 30–35% or more, if eligible |
Short-term rentals have their own income rules that affect the ratio. See DSCR loans for short-term rentals for how lenders count Airbnb income.
Can you get a DSCR loan with 10% or 15% down?
15% down exists with a handful of programs, usually for higher credit scores, single-family properties, and ratios comfortably above 1.0. Expect pricing to reflect the extra leverage. Experienced investors on forums say it plainly: the less you put down, the more it costs.
10% down from a DSCR lender alone is rare. When you see investors closing with 10% down, it is usually a structure: a DSCR first mortgage at 75–80% plus seller financing in second position. Not every DSCR lender allows a seller second, and those that do have rules about its terms, so raise it before you sign a contract that depends on it.
And remember the math cuts both ways. A smaller down payment means a bigger loan, a bigger payment, and a lower DSCR. On a borderline deal, the extra leverage can push the ratio into a worse pricing tier, or below 1.0.
How much cash do you really need to close?
Three buckets, all of which must be documented:
- Down payment. Purchase price minus loan amount.
- Closing costs. Lender fees, any points, appraisal (including the rent schedule), title, recording, and prepaid taxes and insurance. On DSCR loans these commonly run around 3–6% of the loan amount, depending on points and the state.
- Reserves. Cash you keep, not spend, measured in months of PITIA (principal, interest, taxes, insurance, and HOA). Many programs ask for 3–6 months; sub-1.0 ratios, cash-out, larger loans, and investors with several financed properties often need more.
Illustrative only, not a rate quote or offer. Assume a $350,000 single-family rental, rent of $2,700, taxes and insurance of $550 a month, and a hypothetical 7.5% 30-year rate used purely to show the mechanics.
20% down: $70,000 down, $280,000 loan. PITIA about $2,508. DSCR = 1.08.
25% down: $87,500 down, $262,500 loan. PITIA about $2,385. DSCR = 1.13.
30% down: $105,000 down, $245,000 loan. PITIA about $2,263. DSCR = 1.19.
All-in at 25% down: $87,500 down + roughly $8,000–$13,000 in closing costs (3–5% of the loan) + about $14,300 in reserves (6 months of PITIA) = roughly $110,000–$115,000 in verified funds.
Notice the down payment is only about 80% of the cash the lender wants to see. Investors who budget for the down payment alone are the ones scrambling at the last minute.
Where can the down payment come from?
Lenders want to source every dollar. Commonly accepted:
- Personal or business bank accounts, typically seasoned for a couple of months (statements showing the money has been there).
- Proceeds from a cash-out refinance or HELOC on another property. Our comparison of cash-out refi vs. HELOC covers the trade-offs.
- Proceeds from selling another property, including a 1031 exchange (talk to your CPA or qualified intermediary about how the exchange must be structured).
- Stocks or retirement funds you liquidate, documented through the sale.
Usually not accepted: unsourced cash deposits and borrowed money that is not secured by another asset. Gift funds are a gray area. Many DSCR programs do not allow gifts for an investment property down payment, and some allow them with conditions. Ask early if you are counting on one.
If the property will be held in an LLC, the funds can often come from the LLC's account as long as you can show ownership of the entity. Vesting and entity questions belong with your attorney or CPA as well as your lender.
Is putting more down worth it?
Often, yes, on a deal that is borderline. More down can lift the ratio into a better pricing tier, lower your reserve requirement, and give you real cash flow instead of a property that only breaks even on paper. On a deal that already runs 1.25 or better, the extra cash may work harder as a down payment on the next property.
There is no universal answer. Run the deal at 20%, 25%, and 30% down and compare the ratio, the monthly cash flow, and what each scenario leaves in your account.
Figures in this article are illustrative. Actual terms depend on the property, rents, credit, reserves, and underwriting.
FAQ
What is the minimum down payment for a DSCR loan?
Most DSCR programs require 20–25% down on a purchase. A few allow 15% for strong credit and a strong ratio, and lower ratios, condos, and large loans commonly need 25–30% or more.
Can you get a DSCR loan with no money down?
Not from a DSCR lender on its own. Investors who close with very little of their own cash typically use a separate source, such as seller financing in second position or proceeds from another property, and each must be allowed by the lender.
Can I use gift funds for a DSCR down payment?
Many DSCR programs do not allow gift funds for an investment purchase, and some allow them with conditions. Confirm before you rely on a gift.
Do I need reserves on top of the down payment?
Yes. Most DSCR lenders require reserves, commonly several months of PITIA, in addition to the down payment and closing costs.
Does a bigger down payment improve my DSCR?
Yes. A smaller loan lowers principal and interest, the largest part of PITIA, so the same rent produces a higher ratio and can move you into a better pricing tier.
