Question 1

Can I use projected rental income for a vacant property?

Accepted Answer

Yes. Lenders use appraised market rent from Form 1007 or 1025. You don't need a tenant in place, just solid rental comps showing what the property should generate.

Question 2

Do I need reserves for a DSCR loan?

Accepted Answer

Most lenders require 6-12 months of reserves per property. That's PITI times six months sitting in a liquid account—more properties mean more reserves.

Question 3

What if my DSCR is below 1.0?

Accepted Answer

Some lenders go down to 0.75 DSCR with compensating factors. Expect higher rates, larger down payments, and stricter credit requirements below 1.0.

Question 4

Can I use a DSCR loan for a property I'll Airbnb?

Accepted Answer

Yes, but not all lenders accept short-term rentals. We work with several who specialize in vacation rental DSCR loans with appropriate income calculations.

Question 5

How does the rental income calculation work?

Accepted Answer

Lenders take appraised market rent, apply a 15-25% vacancy factor, then divide by your monthly payment. That ratio is your DSCR—higher is better.

Question 6

What down payment do I need in Pismo Beach?

Accepted Answer

Expect 20-25% for standard rentals, 25-30% for vacation properties. Higher DSCR and credit scores can sometimes get you to 20% on STRs with the right lender.

DSCR Loans in Pismo Beach: Qualify Without Tax Returns