For investors looking to keep newly built or renovated properties as rentals—or landlords aiming to scale without traditional income documentation—DSCR loans remain a powerful tool. Whether you’re refinancing a short-term flip, converting a new build into a long-term rental, or scaling your rental portfolio without jumping through full-doc hoops, DSCR may be the fastest path forward.  However, with mortgage rates hovering around 6.5%–7.5%, making rental properties cash flow using DSCR (Debt-Service Coverage Ratio) loans takes a sharper pencil.

 

But it’s still very possible. The key is understanding your numbers, choosing the right markets, and targeting the right price points. In today’s lending environment, the DSCR model lets the property qualify for financing based on its rental income rather than your personal income. Even so, with costs up, break-even deals require more thoughtful underwriting.

Unlike traditional loans, DSCR financing doesn’t require tax returns or W2s—just a rental property that cash flows. DSCR is simply the monthly gross rent divided by your PITIA—Principal, Interest, Taxes, Insurance, and any HOA fees. For DSCR loans, lenders typically want to see that the rent covers at least 100% of those costs (a DSCR of 1.0x). That means if your monthly PITIA is $2,000, the property needs to rent for at least that amount to qualify. And while many DSCR loans offer interest-only options, they still underwrite the deal using a fully amortizing 30-year payment, so there’s no escaping the full payment math.

With today’s rates, property taxes (~1.5% of value), and insurance ($1,500/year),  most properties will need to rent for roughly 0.75%–0.80% of the purchase price each month to break even. That’s about 9–10% annual gross rent. So a $250,000 property should be renting for at least $1,875–$2,000 to hit a 1.0 DSCR. This is higher than national averages of 0.6%, but not out of reach in the right markets. A good, quick check? Multiply the home price by 0.0075—if that rent number is realistic in your market, the deal should work.

This math tends to work best in the $150k–$300k per door range, where rents often scale better relative to purchase price. Once you move into higher-end homes—$500k and up per unit—it’s rare to find rents high enough to cover the monthly costs. Luxury homes and high-cost metro areas often have rent-to-price ratios closer to 0.4% or 0.5% per month, which isn’t close to breakeven at today’s interest rates.

Where It Still Works (And Where It Doesn’t)

Because interest rates remain elevated, many would-be sellers are holding onto their low-rate mortgages instead of selling. This has created tight inventory and strong rental demand. Investors who once planned to sell are now turning to DSCR loans to refinance and hold properties as rentals. It’s also a good time to look at converting flips or short-term rentals to long-term leases, especially if selling doesn't make sense in this rate environment.

Looking ahead, rates may drift lower—some forecasts see high-6% mortgages by the end of 2025—but nobody’s expecting a return to the 3% days anytime soon. That makes DSCR loans an important financing tool, especially if you’re buying in cash-flowing markets or looking to rent instead of sell.

DSCR investing in 2025 is all about the numbers. Focus on markets with solid rent yields, look for properties in that $150k–$300k range, and know how your lender will calculate DSCR. If the deal pencils, DSCR loans offer a fast, flexible path to financing without the income documentation traditional loans require.

Ready to lock in long-term financing while rental demand stays strong? Start your DSCR loan with Upright today and close fast with competitive pricing.