The Quick Read: Plan on a purchase down payment of roughly 20% to 25% across most of the wholesale network, and expect the no-ratio path to ask for more equity, not less. Zero down is not a realistic structure. Terms depend on lender guidelines, credit, property type, and the individual file.
- Standard DSCR purchases typically land at 75%-80% LTV, which means 20%-25% down.
- The no-ratio path is available only through select lenders, generally for borrowers who already own a primary residence. It carries reduced leverage: purchase to 75% LTV, so at least 25% down.
- No-ratio qualification rests on credit and equity. Minimum credit score on that path is 640.
- First-time homebuyers, vacant properties, and files with one or no credit score are not eligible on the no-ratio path.
- Down payment is only one cash need. Closing costs and reserves sit on top of it.
What “No-Ratio” Actually Means
“No-ratio” is a loose label. On a standard DSCR loan, the lender divides the property’s rent by its full monthly obligation (principal, interest, taxes, insurance, and any HOA dues). That result is the coverage ratio. A no-ratio structure skips that calculation. Qualification rests on credit and equity instead.
DSCR Calculator
Run the numbers in your market
Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 15, 2026
Prefilled with starting assumptions — enter your own rent or nightly figures, taxes, insurance, and HOA for a more accurate picture.
Program parameters update from Lendmire’s centralized guideline source. Taxes and insurance are editable estimates.
As of Oct 15, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Rent, nightly rate, occupancy, taxes, and insurance are editable estimates. Short-term rental figures are estimates only and vary significantly by season, property type, management approach, and local short-term-rental rules — confirm local regulations before relying on them. Qualifying income for short-term rentals varies by program — some use appraisal market rent, others use documented STR history or projections — and is confirmed in underwriting. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
The borrower’s personal income is not the test on either path. DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage.
Don’t confuse “no-ratio” with “no requirements.” The lender still looks at credit, the appraisal, reserves, and the property type. It just stops asking the rent to prove the loan. Lendmire, a mortgage broker arranging DSCR financing through select lenders in its wholesale network across 40 states plus Washington, D.C., sees this misunderstanding on first-time files.
Why Equity Matters More When Rent Isn’t Tested
When the rent test is the lender’s main comfort, a thinner down payment can be acceptable on a strong property. Remove the rent test and something else has to absorb the risk. That something is the borrower’s equity in the deal.
So the no-ratio path trades documentation for leverage. Across the network, the approach looks like this:
- Purchase: up to 75% LTV, so 25% down at a minimum.
- Rate-term refinance: up to 70% LTV.
- Cash-out refinance: up to 65% LTV.
- Credit: a 640 minimum score. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Compare that to a standard DSCR purchase, where most files sit at 75%-80% LTV and select high-leverage programs reach 85% LTV with roughly a 700+ score. The standard path is where leverage is highest. The no-ratio path is where it is lowest. All of it is subject to lender guidelines and not a commitment to lend.
Down payment is the inverse of LTV: a bigger down payment lowers LTV and can change loan terms and pricing. At 75% LTV you bring 25% of the price. At 80% LTV you bring 20%. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Does Being a First-Time Investor Change the Number?
Usually, yes, a little. Newer investors should plan for the top of the standard 20%-25% range, or a bit above it. Some programs trim leverage by about five points for a first-timer or adjust terms. Strong reserves and clean credit can support an exception request, but that is a request, not an entitlement.
Two eligibility points matter here:
1. Housing history. Programs differ on how they treat renters and first-time homebuyers. Some want a prior mortgage history. Others do not. The no-ratio path is generally for borrowers who already own a primary residence, and first-time homebuyers are ineligible on it.
2. Credit tier. A 620 floor exists in parts of the network. Most programs want around 660. A 700+ score unlocks the strongest leverage tiers. Pricing and available terms vary by lender, borrower profile, property type, and full underwriting review.
This is where a broker earns its keep. A single lender’s sheet shows one answer. A wholesale network shows many, and the same borrower can fit one program and miss another.
Down Payment by Scenario
| Scenario | Typical leverage | Down payment |
|---|---|---|
| Standard DSCR purchase | 75%-80% LTV | 20%-25% |
| High-leverage select program | up to 85% LTV, ~700+ score | about 15% |
| No-ratio purchase | up to 75% LTV | at least 25% |
| Short-term rental purchase | up to 75% LTV | at least 25% |
| Standard cash-out refinance | up to 75% LTV | equity-based |
| No-ratio cash-out refinance | up to 65% LTV | equity-based |
Cash-out and refinance files have no down payment in the purchase sense. Required equity comes from the maximum LTV. A standard rental cash-out tops out around 75% LTV, and about 6 months of seasoning is the common expectation. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Sub-1.00 coverage is a separate path. Programs below 1.00 are available through select lenders in the network, with leverage and terms adjusted. Where many select programs start coverage at 1.00, that sub-1.00 path pairs lower coverage with a larger equity requirement.
Down Payment Is Not Your Total Cash Need
First-time files get derailed here. The down payment is the biggest line, not the only one. Plan for three buckets together:
1. Down payment. Purchase price minus the loan.
2. Closing costs. Lender, title, and appraisal charges.
3. Reserves. Commonly around 6 months of PITIA. Conservative rate-term files at modest leverage under $1,500,000 can see reserves waived. Loans above that size typically step up to about 9 months. These vary by lender, leverage, loan size, and transaction type.
Reserves are verified from your statements. Expect to hand over recent bank statements and a credit authorization.
A short appraisal changes the math too. The loan is sized on the lower of price or appraised value. If the appraisal comes in under the contract price, LTV rises against the true value, and you cover the gap in cash.
Where the Down Payment Money Comes From
The strongest files use the borrower’s own seasoned funds, documented on statements. Fresh deposits with no paper trail draw questions. Programs also differ on borrowed funds. A down payment funded entirely with borrowed money can fail on that point alone, so confirm the treatment before you structure the file.
That is the friction on most first-time files: the cash is there, but the documentation isn’t.
Does a Bigger Down Payment Help?
It does, in two ways. A larger down payment lowers the monthly obligation, which lifts the DSCR on a standard file. It can also move a borrower into a better leverage tier. Rent and expense adjustments before applying can help the ratio too.
What it never does is erase the rules. Leverage caps, credit floors, reserve requirements, and property eligibility still apply. The strongest files clear both tests: enough equity and enough rental coverage. Every figure here varies by lender and program, since guidelines, property type, leverage, and credit profile all apply.
One caution on reading the number. DSCR compares rent to PITIA only. Clearing 1.00 is not the same as positive cash flow. Repairs, vacancy, management, utilities, and capex all sit outside the calculation. A first rental needs a cushion beyond the minimum for exactly that reason.
When Standard DSCR Beats No-Ratio
If the property’s rent covers its payment, the standard path usually wins for a first-time investor. It reaches higher leverage, so less cash down, and it does not carry the primary-residence-owner restriction. The no-ratio path fits a narrower case: a property whose rent doesn’t test well, such as a lease-up or below-market rent situation, with a borrower who has the credit and the equity to carry it.
A simple decision path:
1. Rent covers the payment: apply on the standard path and plan 20%-25% down. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
2. Rent falls short but coverage is close: ask about the sub-1.00 select-lender path, with adjusted leverage and terms.
3. Rent isn’t tested at all, and you own a primary residence: the no-ratio path, with at least 25% down and a 640+ score. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
4. First-time homebuyer or renter: expect the no-ratio path to be closed. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Property type matters before any of this. Manufactured homes (single- and double-wide), log homes, and barndominiums are not offered in the network’s DSCR programs.
DSCR vs. conventional financing
There are two common ways to finance an investment property, and they qualify you differently — here’s how investors weigh them.
Why investors choose it
- Qualifies on the property’s rental income — no personal tax returns, W-2s, or pay stubs needed to document income.
- No personal debt-to-income ceiling to clear, so existing mortgages and obligations don’t cap your borrowing the same way.
- Can be closed in an LLC, keeping the property inside a business entity.
- Built for scaling — not held to the limit on number of financed properties that conventional financing applies.
- Underwriting centers on the deal: generally qualifies when the rent covers the payment, a 1.00x coverage ratio being a common baseline (confirmed in underwriting).
- Designed specifically for investment property, including long-term and, where the program allows, short-term rentals.
Where it’s strong
- Often the lowest ongoing financing cost for a buyer who fully qualifies on personal income — a fit for a first property or a cost-first purchase.
Trade-offs for investors
- Requires full personal income documentation and must fit within a debt-to-income limit — salary, existing debts, and other mortgages all count.
- Typically held in your personal name rather than a business entity.
- Caps how many financed properties you can carry, which can become a ceiling as a portfolio grows.
- Evaluates you as a borrower as much as the property, which usually means more paperwork.
How investors usually choose: a first or single property often optimizes for the lowest financing cost; portfolio builders often optimize for leverage, vesting in an LLC, and scaling past conventional caps. The right answer depends on your goals, the property, and current guidelines — both paths run through select lenders in Lendmire’s wholesale network, with eligibility and terms confirmed in underwriting.
Zero Down, Low Down, and Low Cash to Close
Zero-down DSCR is not a structure to plan around. These are non-QM, business-purpose loans, so the consumer-mortgage ability-to-repay rules described in the CFPB’s ability-to-repay assessment report do not set the number. Lenders set it, which is why down payment requirements differ from one program to the next.
“Low cash to close” can mean seller credits or a negotiated price, which reduce what you bring but not the underlying LTV. Be wary of any pitch built on inflated prices or undisclosed credits.
Lower-down products do exist, but they belong to different loan types. An FHA loan on a 2-4 unit property works only if you live in one unit, and it is owner-occupied financing, not DSCR. Once a pure rental purchase is the plan, DSCR is the practical route. Lendmire’s complete DSCR loans guide covers how the programs fit together.
Pre-Application Checklist for a First-Time Investor
- Credit report reviewed, with your score against the 620, 660, 700 tiers in mind.
- Down payment sized at the top of the 20%-25% range, or 25% for no-ratio.
- Closing costs and reserves added on top.
- Two months of statements gathered, with large deposits explained.
- Lease or rent schedule ready. Appraisers document market rent on investment properties with the rent schedule form (Form 1007), described in Fannie Mae’s appraiser update and used here only as an appraisal form.
- Entity documents ready if you are buying in an LLC, subject to lender program eligibility.
- Property type confirmed as eligible.
For a deeper look at eligibility, Lendmire’s piece How to Qualify for a No-Ratio DSCR Loan for First-Time Investors covers the file requirements. Tax treatment varies; consult a qualified professional.
Key Terms Defined
LTV (loan-to-value): The loan amount divided by the purchase price or appraised value, whichever is lower.
PITIA: Principal, interest, taxes, insurance, and association dues, the full monthly obligation.
DSCR: Monthly rent divided by PITIA. It measures whether the property’s rent covers its payment.
Reserves: Liquid funds verified after closing, commonly counted in months of PITIA.
No-ratio: A structure where qualification rests on credit and equity instead of a rent-coverage calculation.
Frequently Asked Questions
Can a first-time investor get a DSCR loan with zero down?
No. Purchase leverage tops out around 80% LTV on most programs and 85% on select high-leverage ones. Even the strongest first-time file needs real equity, plus closing costs and reserves.
What is the minimum down payment on a no-ratio purchase?
At least 25%, since purchase leverage on that path goes to 75% LTV. It also needs a 640+ credit score, and it is available only through select lenders, generally for borrowers who already own a primary residence. Eligibility is subject to lender guidelines.
Can I use a no-ratio loan if I rent my home?
Generally not. First-time homebuyers are ineligible on the no-ratio path. A standard DSCR program may still work, and some accept renters while others want housing history, so the program choice matters.
Does a larger down payment improve my chances?
It can lift the coverage ratio and may support a better leverage tier. It does not override credit floors, reserve rules, or property eligibility.
Do I need reserves on top of the down payment?
Yes, in most cases. Reserves commonly run around 6 months of PITIA, stepping up to about 9 months on loans above $1,500,000. Some conservative rate-term files see them waived. It varies by lender and file.
If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals. Reach the team at 828-256-2183 or request a quote.
A first rental rewards the investor who sizes total cash, not just the down payment, before making an offer.
About Lendmire
Lendmire (NMLS# 2371349) is a DSCR-focused mortgage broker that helps arrange investor financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR eligibility is generally reviewed by the lender around the property’s rental income rather than personal income documentation, subject to lender guidelines, which works for self-employed investors, LLC operators, and portfolios above four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. CFPB: CFPB Ability to Repay Qualified Mortgage Assessment Report
2. Fannie Mae: Appraiser Update June
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Document a Jumbo DSCR Loan · How Much Down Payment Does a Large-Balance DSCR Loan Need? · How Much an IO ARM Payment Shifts vs. a Fixed DSCR Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.