DSCR Loans in Phoenix, AZ

The short answer

At $405,689, the typical home price, this rent produces a 0.74x ratio. This rent is a citywide typical asking rent across rentals of all kinds, apartments included, so a single-family house often rents for more. DSCR is monthly rent divided by the full monthly payment: principal, interest, property taxes, insurance and any HOA dues. At 1.20x, rent is 20% more than that payment. At this rent, a house priced at $249,300 or less reaches 1.20x, with a $187,000 loan at that price.

What a deal needs here

• The maximum full monthly payment for $1,843 a month in rent to reach 1.20x is $1,536 a month.
• At $299,100, $1,843 a month in rent only matches the full payment at 1.00x, leaving no cushion for a vacancy. Many DSCR lenders accept 1.00x.
• A price of $224,300 is the maximum that leaves money each month after setting aside 25% for vacancy, repairs and management.
• At the typical price, a house would need $2,999 a month in rent to reach 1.20x. Under the assumptions below, it would need a 59% down payment to reach that ratio at this rent.

These figures assume 25% down (a 75% loan), a 7.5% 30-year fixed rate, property tax about 0.6% of the price a year, landlord insurance about 0.5% of the price a year, and no HOA dues. A house with HOA dues needs a lower price.

Where to start looking

Use $249,300 as the price ceiling for this rent to reach 1.20x. For a specific house, compare its price with the rent the lender will use for that property, rather than relying on this rent.

How a lender will look at your deal

DSCR loans are for rental property you do not live in. Many lenders use the signed lease or an appraiser’s estimate of market rent for the house, and many use the lower of the two. For a vacant house, lenders use the appraiser’s estimate.

Many DSCR lenders accept 1.00x, where rent only matches the full payment. That leaves no cushion for a vacancy. Lenders also consider credit, the down payment and reserves—the cash you keep after closing—and each lender sets its own minimum loan size.

Before you apply

• Gather the signed lease or recent rents for similar nearby houses.
• Check the property’s insurance quote and flood zone.
• Compare the property’s actual taxes and insurance with the assumptions above, and confirm any HOA dues.

FAQ

Can a house with an existing lease use that rent?

Many DSCR lenders consider the signed lease and an appraiser’s estimate of market rent for that house, and many use the lower of the two.

Can a vacant Phoenix house qualify?

Many lenders use an appraiser’s estimate of market rent for a vacant house.

Can I buy the house to live in?

DSCR loans are for rental property you do not live in. If you plan to live in the house, this loan type is not for that use.

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Market data: the local rent, price, and payment estimates in this guide come from Phoenix, AZ DSCR market data, published by DSCRInfo. Those numbers are a public starting estimate. Sphinx Capital reviews the actual property, borrower, and reserves before making a lending decision.