Question 1

Can I use projected rent on a vacant property?

Accepted Answer

Yes. The appraiser provides a market rent estimate. You don't need a signed lease, but vacant properties get stricter DSCR minimums — usually 1.2 instead of 1.0.

Question 2

Do DSCR loans allow cash-out refinancing?

Accepted Answer

Some lenders do, others don't. Cash-out DSCR typically requires 1.25 DSCR minimum and caps at 75% LTV. Rates run 0.5-1% higher than purchase DSCR.

Question 3

How does DSCR handle properties with multiple units?

Accepted Answer

Each unit's rent counts toward total income. A duplex with $3,000 combined rent and $2,400 debt service hits 1.25 DSCR. More units mean stronger ratios if rents hold.

Question 4

Can I qualify for DSCR with a recent foreclosure?

Accepted Answer

Most lenders want 3-4 years since foreclosure. Some portfolio lenders go to 2 years if DSCR is strong and you have 25%+ down. Each lender sets their own timeline.

Question 5

What happens if appraised rent comes in low?

Accepted Answer

You either increase your down payment to lower debt service or walk away. Some buyers lock a backup tenant at higher rent and show the lease to the appraiser for reconsideration.

DSCR Loans in Watsonville: Income Property Financing Without Tax Returns