The Quick Read: Usually 20% to 25% down on a purchase, because most programs in Lendmire’s wholesale network cap leverage at 75% to 80% of the price, while select high-leverage programs reach 85% LTV with about 15% down for borrowers with roughly a 700 or higher credit score, subject to lender guidelines. New Mexico adds no special rule, so the same figures apply to a duplex in Albuquerque, a fourplex in Las Cruces, or a rental in Santa Fe.
- Most purchase files land at 75% to 80% LTV, which means 20% to 25% down.
- LTV (loan-to-value) is the loan amount divided by the property’s value or price. Down payment is the other side of it.
- Cash-out refinances top out around 75% LTV on a standard rental, so existing equity takes the place of a down payment.
- A bigger down payment can lift the coverage ratio, but it never erases credit floors, reserve rules, or property eligibility.
- Zero-down is not a DSCR program. Equity from another property is the usual way investors reduce the cash they bring. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Why Is There No Single Number?
The down payment on a DSCR loan is not set by a regulator or by a state. Each lender in the network sets its own leverage tiers, and those tiers move with credit score, property type, loan size, and loan purpose.
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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.
That is the advantage of working with a broker who sees many programs side by side. Scotsman Guide, a trade publication for mortgage professionals, notes that DSCR requirements vary from lender to lender. In practice, one lender may allow generous leverage on a smaller balance and pull it back sharply on a larger one. Another may tighten leverage for a weaker credit score and leave everything else alone.
For a New Mexico investor, that means the question is not “what does the state require?” It is “which program fits my credit, my property, and my cash?” The state matters only as the property location. 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.
What Down Payment Do Most DSCR Programs Ask For?
On a purchase, most programs we place files with land at 75% to 80% LTV on an investment property. That is 20% to 25% down. Select high-leverage programs reach 85% LTV on a purchase, which means about 15% down. Those programs usually want a credit score near 700 or better.
Here is how the tiers generally break down across the network, always subject to lender guidelines and property review:
| Scenario | Typical max LTV | Typical cash in |
|---|---|---|
| Standard purchase | 75%–80% | 20%–25% down |
| High-leverage purchase (700+ score) | Up to 85% | About 15% down |
| Cash-out refinance, standard rental | About 75% | Equity replaces down payment |
| Short-term rental purchase | Up to 75% | 25% or more down |
Credit shapes where you land in that range. A 620 score is the floor in parts of the network. Most programs want around 660. A score of 700 or higher unlocks the strongest leverage tiers. A borrower at the low end of the credit range should expect to sit toward the lower-leverage end of the table.
Loan size matters too. Standard programs run up to $3,000,000, and smaller balances route through select lenders in the network. Above $2,500,000, the network generally holds to 30-year fixed structures.
What Moves the Number Up or Down?
Six things change the down payment you should plan around. Credit score and property type do the most work on a purchase. Coverage ratio does the most work when a deal is borderline.
| Factor | Effect on down payment |
|---|---|
| Credit score | Higher score can open 85% LTV; lower score pulls leverage back |
| Coverage ratio | Stronger ratio supports better leverage and pricing |
| Property type | Short-term rentals and some multi-unit deals carry lower caps |
| Purchase vs. cash-out | Cash-out tops out lower than a purchase |
| Loan size | Larger balances typically mean tighter leverage and more reserves |
| Reserves | Thin reserves can limit leverage or require more cash in |
A word on coverage, since it ties into everything. DSCR (debt service coverage ratio) compares the property’s monthly rent to its monthly PITIA, which is principal, interest, taxes, insurance, and HOA dues if any. A ratio of 1.00 means the rent equals the payment. Many select programs start at 1.00. Stronger ratios open better pricing and leverage.
A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. That usually means more cash down and more reserves. If you are weighing a property that does not cover its payment on rent alone, expect the down payment conversation to change.
How Does a Bigger Down Payment Change the Coverage Ratio?
More cash down lowers the loan, which lowers the monthly payment, which raises the coverage ratio. The effect is real but smaller than most investors expect, because taxes and insurance do not shrink when the loan does.
Run the numbers on a modeled property. Assume the rent and the taxes and insurance stay fixed, and assume principal and interest make up about 70% of the full PITIA at 80% LTV. These are modeled assumptions, not market data. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
- At 80% LTV (20% down), coverage lands near 1.00x.
- At 75% LTV (25% down), coverage improves to roughly 1.05x.
- At 70% LTV (30% down), coverage reaches roughly 1.10x. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Each extra five points down buys about 0.05x of coverage in this example. That can turn a borderline file into one that clears a program’s floor. It can also improve pricing. It cannot fix a credit score below the program minimum, and it cannot make an ineligible property eligible.
One caution on what the ratio means. Clearing 1.00 does not mean the property cash flows. DSCR counts rent against PITIA only. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation, so an investor still needs a margin beyond the ratio.
The strongest files clear both tests: enough equity and enough rental coverage. When a deal fails one, you can often fix it by adjusting the other. Lendmire’s complete DSCR loans guide walks through how those two tests interact on a full file.
What Does It Take to Close Beyond the Down Payment?
The down payment is the biggest check, but it is not the only one. Plan for the appraisal, closing costs, prepaid taxes and insurance, and reserves. Reserves are liquid funds the lender wants you to keep after closing.
Reserves vary by lender, leverage, loan size, and transaction type. Many files ask for around 6 months of PITIA. Conservative rate-and-term refinances at modest leverage under $1,500,000 can see reserves waived. Loans above that size typically step up to about 9 months. A bigger down payment does not replace reserves, since the two serve different purposes.
Down payment funds generally need to be documented from your own accounts. Lenders look at bank statements to see where the cash came from. Large unexplained deposits create questions, so move money before you apply rather than after.
The usual documents for a DSCR purchase are the property appraisal, any lease showing rental income, a current credit report, and proof of funds. Scotsman Guide lists the same core items. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. It does not skip documentation.
Can You Buy With Nothing Down?
No. A DSCR purchase requires real equity, and leverage tops out around 85% LTV on select programs. The idea that DSCR means low or no down payment is one of the most common misunderstandings. Lendmire has a separate piece on no-down-payment DSCR options explained, and the short version is that equity has to come from somewhere. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
The realistic way to reduce the cash you bring is to use equity you already own. Scotsman Guide points out that a cash-out refinance on one rental can fund the down payment on the next. On a standard rental, cash-out tops out around 75% LTV. About 6 months of seasoning is the common expectation, meaning you have owned the property long enough for the lender to treat it as stabilized. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Cash-out has trade-offs. Run both properties’ numbers before you commit. Our guide on DSCR loan down payment requirements covers the equity-sourcing question in more detail.
How Do Property Type and Use Change the Requirement?
Standard long-term rentals get the leverage tiers above. Other property types shift them.
Short-term rentals sit on a tighter set of terms. A purchase goes up to 75% LTV, a refinance sits around 70%, and a cash-out is capped at 70%. Expect a credit score of 640 or higher and about 12 months of hosting history. The coverage floor is 1.00 on both a purchase and a refinance. The ceiling for a cash-out on short-term-rental collateral is 70%, while a standard rental reaches about 75%. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Small multifamily (2 to 4 units) generally follows the standard tiers. Condos are generally eligible, but each lender reviews the project.
Some property types are not offered in the network’s DSCR programs: manufactured homes (single- and double-wide), log homes, and barndominiums. That matters in a state where rural and manufactured housing is common. If you are looking at one, a DSCR loan is not the tool.
DSCR loans are for non-owner-occupied investment property only, so you cannot use one to finance your own home. No-ratio structures, where the lender does not calculate coverage, are available only through select lenders, generally for borrowers who already own a primary residence.
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.
Does New Mexico Change Anything?
Not in the guidelines. The network carries no state-specific LTV overlay, so every state takes the standard purchase tiers above. What New Mexico does change is the practical side of the deal.
Rural properties can be harder to appraise when comparable sales are thin. An appraiser who cannot find close comps may land on a value that cuts into your loan amount, which means more cash at closing. Build a little slack into your cash plan if the property sits outside a metro area. Keep in mind that the down payment is measured against the lower of price or appraised value on most programs.
You can also buy through an LLC, depending on program guidelines. Entity purchases need extra documents, so raise that early.
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. The federal rules treat credit extended primarily for business purposes differently, and the CFPB’s Regulation Z §1026.3 says the creditor decides that in each case. That is one reason the loan has to be for an investment, not a home you live in.
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.
Why Do DSCR Loans Ask for More Down Than a Home Loan?
Lenders treat a rental as a business asset. The borrower is not living in it, so the lender wants a bigger equity cushion in case rents fall or the property sits vacant.
Government-backed low-down-payment programs such as FHA and VA are built for owner-occupied purchases, so they do not apply to a pure rental. A pure rental purchase usually moves to DSCR for that reason. Select lenders in the network will review sub-1.00 coverage, with leverage and terms adjusted, which is a path conventional investor loans rarely offer.
DSCR also solves problems conventional loans create. Scotsman Guide lists several reasons investors choose it: it avoids the agency cap of 10 financed properties, it can finance non-warrantable condos, and it suits investors who need to close a purchase as part of a 1031 exchange. The price is a higher equity requirement. For an investor with several properties, that trade is usually worth it.
Key Terms Defined
LTV (loan-to-value): The loan amount divided by the property’s value or price. A 75% LTV means the lender funds 75% and you fund the rest. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
DSCR: Monthly rent divided by the monthly PITIA. A ratio above 1.00 means the rent exceeds the payment.
PITIA: Principal, interest, taxes, insurance, and HOA dues if any. It is the full monthly housing payment.
Reserves: Liquid funds you keep after closing, usually counted in months of PITIA.
Seasoning: The time you have owned a property before a lender will treat a cash-out refinance as stabilized.
Non-QM: A loan outside standard mortgage guidelines, underwritten on its own terms. DSCR loans fall here.
Frequently Asked Questions
Is 15% down possible on a DSCR loan?
Sometimes. Select high-leverage programs reach 85% LTV on a purchase, which is 15% down, but they usually want a score around 700 or better. Most files land at 20% to 25% down. Whether a file fits depends on credit, property type, and lender review.
Does the down payment have to be my own money?
Funds generally need to come from your own documented accounts, and lenders look at where the cash came from. Cash-out proceeds from another rental you own can serve as a source. Move large sums into your accounts well before you apply so the history is clear.
Does a bigger down payment guarantee I qualify?
No. More cash lowers the loan and raises coverage, which helps. It does not override credit floors, reserve rules, or property eligibility. A file still has to clear lender review on both equity and rental coverage.
How much do I need to bring for a cash-out refinance?
No purchase down payment applies, because your equity does that job. Cash-out on a standard rental generally tops out around 75% LTV, and about 6 months of seasoning is the common expectation. Short-term rental collateral caps at 70%.
Is the down payment different in New Mexico than in other states?
No. The network carries no state-specific LTV overlay, so New Mexico takes the same tiers as everywhere else. The practical differences are local, such as thin rural comps affecting the appraisal.
Next Steps
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. Qualification is subject to lender guidelines. This is not a commitment to lend. Start with your target price, your credit tier, and how much cash you want to keep in reserve after closing.
About Lendmire
A DSCR-focused mortgage broker, Lendmire (NMLS# 2371349) places investor financing across 41 markets — 40 states plus Washington, D.C. — with DSCR eligibility generally reviewed by the lender on property cash flow instead of tax returns, subject to lender guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in 2025 and 2026.
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References
1. Scotsman Guide – DSCR expert article
2. CFPB – Regulation Z §1026.3
3. Scotsman Guide – Invest in Your Future
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How a First-Time Landlord Qualifies for a Smaller DSCR Down Payment · Putting 15% Down vs. 25% Down on a Short-Term Rental DSCR Loan · How to Qualify a Suburban Florida Airbnb on a DSCR Loan
Guides: DSCR Loans in New Mexico
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.