The Quick Read: Usually 20% to 25% of the purchase price, which puts most purchase files at 75% to 80% LTV on an investment property, subject to lender guidelines. Indiana does not change that number, because leverage is set by the program, the credit score, and the rental coverage, not by the state.
- Purchases typically run 75%-80% LTV, so 20%-25% down on most files.
- Select high-leverage programs reach 85% LTV (15% down) with roughly a 700+ score.
- Cash-out refinances top out around 75% LTV, with about 6 months of seasoning common.
- Credit floors start near 620, most programs want about 660, and 700+ opens the strongest tiers.
- Indiana’s property-tax cap affects the rent-to-payment math, not the down payment.
DSCR loans qualify primarily on property-level rental income covering the payment, subject to lender guidelines. Personal income documentation is not the focus. Equity still is. Anyone selling “zero down” on a DSCR purchase is selling something other than what the network’s programs offer.
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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.
How the Down Payment Is Set
The down payment is the purchase price minus the loan amount. The loan amount is capped by the program’s maximum LTV, and lenders size it off the lower of the purchase price or the appraised value. If a property appraises under the contract price, the buyer covers the gap in cash.
Across the wholesale network Lendmire works with, purchase leverage on most files lands between 75% and 80% LTV. Select high-leverage programs reach 85% LTV with roughly a 700+ score. Those are ceilings, not promises. Each file is underwritten individually.
DSCR down payments are set lender by lender and program by program. No federal agency sets them. DSCR loans are non-QM investor products, not agency products.
Two Tests, and the Stricter One Sets Your Cash
Every DSCR purchase has to clear two tests. First, the program’s leverage cap. Second, whether rent covers the payment at the resulting loan size.
DSCR is monthly rent divided by the monthly housing payment: principal, interest, taxes, insurance, and any HOA dues. The definition of the debt service coverage ratio is simple: below 1.0, income does not cover the debt payments.
Here is where files get surprised. Say an investor targets 80% LTV on a duplex. The leverage cap allows it. But rent only covers the payment at 0.92x. The lender won’t just approve the cap. The loan gets sized down, and the investor brings more cash. Coverage binds first. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
A smaller loan means a smaller payment, which lifts the ratio. That is why a larger down payment can rescue a file that fails at higher leverage. It cannot fix everything. It never erases leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
One more point. Clearing 1.00 is not the same as positive cash flow. DSCR compares rent to the housing payment only. Repairs, vacancy, management, utilities, and capex sit outside it.
What Moves the Number
Five things push the down payment up or down:
| Factor | Effect on cash needed |
|---|---|
| Credit score | 700+ opens top leverage tiers; lower scores cut LTV |
| DSCR level | Stronger coverage supports leverage and better terms |
| Transaction type | Cash-out caps run lower than purchase caps |
| Property type | 3-4 units and short-term rentals typically need more equity |
| Loan size | Larger balances can tighten leverage and add reserves |
Credit tiers in the network step through 620, 660, 680, and 700. A 620 floor exists in parts of the network. Most programs want around 660. Borrowers near the bottom should expect lower LTV, which means more down.
Coverage below 1.00 is a different path. Many select programs start at 1.00. A separate path through select lenders takes coverage below 1.00, with leverage and terms adjusted. Expect more cash down on those files, not less. No-ratio structures are also available only through select lenders, generally for borrowers who already own a primary residence.
Short-term rentals run tighter. Purchase leverage tops out at 75% LTV, and cash-out sits around 70%. Expect a 640+ score and about 12 months of hosting history. The coverage floor is 1.00 on purchases and refinances. Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Cash-Out Refinances Have No Down Payment (Just an LTV Cap)
A cash-out refinance doesn’t have a down payment. The equivalent is the LTV ceiling: around 75% on standard rentals across most of the network, with about 6 months of seasoning as the common expectation. Seasoning is documented from the settlement statement. Files that assume it away get kicked back.
An owner of a paid-down Indiana rental can use that equity to fund the next purchase’s down payment. Lendmire’s pages on what a DSCR cash-out refinance can release walk through that mechanic. Source and seasoning of down payment funds are program-specific, so confirm whether borrowed or gifted money is acceptable before drawing it.
Cash to Close Is More Than the Down Payment
The down payment is one line. Closing costs and reserves sit beside it.
Reserves vary by lender, leverage, loan size, and transaction type. Commonly it’s 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. Reserves have to be documented, the same as the down payment.
Loan size matters too. Standard programs run up to $3,000,000, and above $2,500,000 the network generally holds to 30-year fixed structures. Smaller balances route through select lenders. That matters in Indiana’s lower-priced neighborhoods, where a modest purchase can fall under a lender’s minimum loan size. A cheap house isn’t automatically an easy file.
Typical documents on a purchase: the lease or a market-rent appraisal, the property appraisal, insurance, entity documents if buying in an LLC (subject to program terms), and proof of funds for the down payment, closing costs, and reserves. Rent schedules typically come from appraisal Form 1007, and small-multifamily appraisals use Form 1025.
Properties the network does not offer: manufactured homes (single- and double-wide), log homes, and barndominiums.
The Indiana Piece: Property Tax Hits the Denominator
No Indiana rule changes the down payment. Indiana does change the expense side of the ratio through its property-tax cap.
The Indiana DLGF circuit-breaker fact sheet lists caps by property class: 1% of gross assessed value for homesteads and 2% for residential property. A property needs the homestead deduction to get the 1% cap, so a rental sits in the 2% class. That copy is older, so verify against the current DLGF site before treating it as current law.
Newer legislation may help. A DLGF memo on 2025 legislation describes a new deduction for 2%-cap properties, including non-homestead residential. US Tax Disputes reports the deductions start automatically with taxes payable in 2026 and cover rental property and apartments.
Honest read: lower taxes help the ratio only if the lender underwrites actual or estimated taxes. The cap limits the bill, not the assessment. Don’t count on a lower required down payment because of it. The more likely benefit is a stronger coverage number at the same leverage.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
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.
Common Misreads
“No income docs means no down payment.” The program skips personal income documentation as the focus. It does not skip equity.
“20% is a universal rule.” It’s a common benchmark. Credit, coverage, property type, and program move it.
“I’ll get the program’s maximum LTV.” Rent coverage can bind first, so the cash you need can exceed the published minimum.
“Indiana has special DSCR down payment rules.” No state-specific down payment rule applies to DSCR loans here. Indiana shapes expenses, not the leverage cap.
For the broader picture, see Lendmire’s complete DSCR loans guide. For a comparison on a different property type, Lendmire’s piece How Much Second Home Down Payment a Cash-Out Refinance Funds covers that separate product.
Key Terms Defined
LTV: Loan-to-value, the loan amount divided by the lower of price or appraised value.
PITIA: Principal, interest, taxes, insurance, and association dues, the full monthly housing payment.
Seasoning: The period a borrower must own a property before cash-out is available.
Reserves: Documented liquid funds held after closing, usually counted in months of PITIA.
Circuit-breaker cap: Indiana’s limit on a property tax bill as a share of gross assessed value.
Frequently Asked Questions
Is there a zero-down DSCR loan in Indiana?
Not through the network’s programs. Purchases need real equity, typically 20% to 25% down, with select high-leverage programs at 15% down for roughly 700+ scores. Treat any zero-down offer with caution.
Can I put down less than 20%?
Sometimes. Select high-leverage programs reach 85% LTV with roughly a 700+ score, which means 15% down. Strong credit, strong coverage, and a simple property type help. Lower scores and thinner coverage push the requirement the other way. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Does a bigger down payment improve my DSCR?
Yes. A smaller loan means a smaller payment, so the same rent covers it by a wider margin. It can turn a failing file into a passing one, though it won’t override credit floors or reserve rules.
Is the down payment based on price or appraised value?
The lower of the two. If the appraisal comes in under the contract price, the buyer funds the difference in cash.
Do I need reserves on top of the down payment?
Usually, yes. Around 6 months of PITIA is common, with about 9 months above $1,500,000. Some conservative rate-term files at modest leverage can see reserves 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. Program details are subject to lender guidelines and are not a commitment to lend.
About Lendmire
Lendmire, NMLS# 2371349, is a non-QM mortgage broker serving real estate investors in 41 markets, including Washington, D.C., through DSCR investor loan programs. Qualification is generally reviewed around the subject property’s rental income, not the borrower’s W-2 history — a practical fit for LLC-titled portfolios and self-employed investors. All scenarios remain subject to lender review and program guidelines. Two consecutive Scotsman Guide Top Mortgage Workplace recognitions (2025, 2026).
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References
1. Debt service coverage ratio
2. Indiana DLGF Circuit Breaker Caps Fact Sheet
3. Indiana DLGF 2025 Legislation Memo
4. US Tax Disputes: Indiana Tax Developments
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Much Down Payment Does a DSCR Loan in Iowa Require? · How Much Down Payment Does a DSCR Loan in Virginia Require? · How Much Down Payment Does a DSCR Loan in California Require?
Guides: DSCR Loans in Indiana
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.