The Quick Read: Usually 20% to 25% down on an investment-property purchase, because most programs in Lendmire’s wholesale network cap the loan at 75% to 80% of the price or value, with select high-leverage programs reaching 85% loan-to-value (LTV, the share of the property’s value the lender funds) for borrowers around a 700 score or better. The state does not set that number. The lender’s program grid does.
- Purchase of an investment property: typically 75%–80% LTV, which means 20%–25% down. The 85% LTV tier (15% down) is a select-program option that generally wants a 700+ score.
- Cash-out refinance: tops out around 75% LTV on standard rentals, and about 6 months of seasoning is the common expectation.
- Zero down: not part of these programs. Expect to bring real, documented cash.
- Arkansas: every state takes the same standard purchase tiers, and no state-specific LTV overlay applies.
- Reserves: months of savings you hold after closing sit on top of the down payment, not inside it.
All of this is subject to lender guidelines and individual file review, and none of it is a commitment to lend.
DSCR Calculator
Run the numbers in Arkansas
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.
Key Terms Defined
You will see a handful of lender terms below. Here is each one in plain English.
- DSCR (debt service coverage ratio): the property’s monthly rent divided by its monthly housing payment. Above 1.00 means the rent covers the payment on paper.
- PITIA: principal, interest, taxes, insurance, and association dues. It is the full monthly obligation the rent gets measured against.
- Reserves: liquid savings, counted in months of PITIA, that you keep after paying the down payment and closing costs.
- Seasoning: the waiting period a lender wants between buying a property and refinancing it.
- Cash-out refinance: a new loan larger than your current payoff, where you take the difference as cash.
- Business-purpose loan: a loan made to buy or hold a rental for investment, not a home you live in.
How Does Down Payment Relate to LTV?
Down payment is the mirror image of LTV. Take 100% and subtract the maximum LTV, and you have your minimum down payment percentage.
A program that lends up to 75% leaves you with 25% down. A program that lends up to 80% leaves 20%. The lender does this because the property is its main protection if a loan goes bad. Your equity is the cushion that sits between the lender and a loss. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Lenders also work from the lower of the purchase price or the appraised value. If the appraisal comes in below your contract price, the loan shrinks and your cash need grows. Plan for that possibility on any deal where you are paying top of market.
Here is how the typical tiers look across the programs we place files with.
| Transaction | Typical max LTV | Equity you keep in |
|---|---|---|
| Purchase, standard rental | 75%–80% | 20%–25% |
| Purchase, select high-leverage (about 700+ score) | Up to 85% | About 15% |
| Purchase, short-term rental | Up to 75% | About 25% |
| Cash-out, standard rental | Around 75% | About 25% |
| Cash-out, short-term rental | Around 70% | About 30% |
The cash-out ceiling is around 75% on standard rentals and around 70% on short-term-rental collateral. Those are different caps, so check which one your property falls under.
Does Arkansas Change the Number?
No. The down payment depends on the program, the borrower, and the property. It does not depend on which state the rental sits in. Arkansas files use the same standard purchase tiers shown above, and no state-specific LTV overlay is in force.
State law does touch other parts of a DSCR loan, such as how prepayment penalties are structured. That is a separate question from leverage, and your broker’s compliance team handles it.
The thing that does change from deal to deal is how much of the headline percentage you actually end up wiring. The next section explains why.
What Moves Your Minimum Down Payment?
Five levers do most of the work. Lenders in the network weigh them together, so a weak spot in one can cancel a strength in another.
Credit score. A 620 floor exists in parts of the network. Most programs want around 660. A 700 or better unlocks the strongest leverage tiers, including the 15% down option on a purchase. Better credit often improves pricing more than it lowers the minimum.
Rental coverage. Many select programs start at a 1.00 DSCR, and stronger ratios open better pricing and leverage. A separate select-lender path takes coverage below 1.00, and on that path leverage and terms are adjusted, so expect more cash down.
Property type. Single-family rentals get the cleanest treatment. Two-to-four-unit properties, condos, and short-term rentals are often treated more conservatively, which can mean less leverage. Manufactured homes, log homes, and barndominiums are not offered in these programs.
Loan size. Standard programs run up to $3,000,000. Smaller balances route through select lenders in the network. Above $2,500,000 the network generally holds to 30-year fixed structures, and bigger loans tend to carry steeper reserve requirements.
Purchase versus cash-out. On a refinance, down payment becomes the equity you must leave in the property. The cap is lower than on a purchase, and seasoning usually applies.
For short-term rentals, expect a 640+ score and about 12 months of hosting history. 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.
Can You Buy With No Money Down?
Not through these programs. Your equity is the lender’s cushion, and lenders want you to have your own capital in the deal.
Most programs expect the down payment to come from your own documented funds. Borrowing it through a second loan at closing is generally not allowed. The exact treatment of gift funds, business funds, or retirement money varies by program, so ask before you assume.
Lendmire’s explainer on DSCR loan no-down-payment options walks through what investors try and what actually holds up.
Why Two Tests Matter: Equity and Coverage
Your file has to pass two separate tests. The first is leverage: enough equity to fit under the LTV cap. The second is coverage: enough rent to cover PITIA at that loan size.
A bigger down payment helps with both. It shrinks the loan, which lowers the payment, which lifts the DSCR. But it never erases the other rules. Credit floors, reserve requirements, and property eligibility stay where they are. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Consider a scenario with a purchase that pencils at roughly 0.97x coverage at 80% LTV on an investment property. Cutting the loan to 75% LTV might push the number above 1.00x. That is a modeled illustration, not a promise, and the actual lift depends on the property and the lender. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
The same thing happens in high-priced markets with modest rents. The cap says 75% or 80%, but the coverage test can force a smaller loan. When that happens, you bring more cash than the headline percentage suggests. In high-rent-to-price markets the coverage test is easy, and the LTV cap is the only limit.
What Else Do You Need Beyond the Down Payment?
Plan for total cash to close, not just the down payment. That figure includes the down payment, closing costs, prepaid items such as insurance and tax escrows, and the appraisal. Reserves come after that.
Reserves vary by lender, leverage, loan size, and transaction type. Many files need about 6 months of PITIA. Conservative rate-and-term refinance files at modest leverage under $1,500,000 can see reserves waived. Loans above that size typically step up to about 9 months.
Reserves are a separate cushion. A lender wants to see that you can make payments after you have spent your cash at the table.
What Documents Prove Your Funds?
Lenders source and verify your money. DSCR loans qualify primarily on property-level rental income covering the payment, subject to lender guidelines. The lender still wants proof of the cash you are bringing.
Here is a typical checklist.
- Purchase contract, or the current mortgage statement on a refinance.
- Appraisal with a rent schedule. Lenders commonly use appraisal forms 1007 (rent schedule) and 1025 (small residential income property).
- Lease or market rent estimate for the property.
- Entity documents, if you are vesting title in an LLC, subject to lender program eligibility.
- Recent asset statements covering the down payment, closing costs, and reserves.
- Explanation letters for any large, recent deposits that do not trace back to a clear source.
Big unexplained deposits cause most of the delays we see on asset review. Keep your money in one place and leave it alone.
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.
Is It a Business-Purpose Loan?
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.
Federal consumer-credit rules carve out credit extended for a business purpose and credit extended to an entity rather than a person, such as an LLC. That framework is why the down payment comes from lender risk appetite and not from consumer-mortgage rules. It also means FHA and VA low-down options do not apply to a pure rental purchase.
What Does a Bigger Down Payment Cost You?
More down lowers your loan amount, your payment, and usually your pricing. It also raises your DSCR. The trade-off is cash tied up in one property.
Think about it as cash-on-cash return. If a smaller down payment passes both tests, you can spread capital across more doors. If the coverage ratio only clears with extra equity, the larger down payment is the price of qualifying.
Higher leverage generally costs more in pricing, and that can drag a borderline property below the coverage line. The 85% LTV tier is real, but it is a select-program option with a stricter credit profile. It is not an automatic upgrade for anyone who asks.
One more caution. Clearing 1.00 is not the same as positive cash flow. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation. A property can clear the lender’s test and still leave you thin after real-world costs.
If you are pulling equity from a rental you already own, 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.
For a wider look at the numbers behind these tiers, see Lendmire’s overview of DSCR loan down payment requirements. The complete DSCR loans guide covers qualification from start to finish.
Common Mistakes on Down Payment Planning
Budgeting only the headline percentage. Closing costs, prepaids, and reserves come on top. Build the full cash-to-close number before you make an offer.
Ignoring the appraisal risk. A low appraisal reduces the loan and raises your cash need on the same contract price.
Assuming a better score always means less down. A higher score can unlock the 15% down tier, but pricing rises with leverage. Often the better move is a slightly larger down payment and stronger coverage.
Stretching on a thin deal. Maximum leverage on a property that barely clears 1.00 leaves no room for a vacancy or a repair bill. Consider a smaller loan and sleep better.
Mixing up your cash-out cap. The ceiling is lower on a cash-out than on a purchase, so a refinance that looked easy at purchase leverage may not work.
Frequently Asked Questions
Is 15% down really possible on a DSCR loan?
On a purchase of an investment property, yes, through select high-leverage programs that reach 85% LTV. Those programs generally want a 700+ score and a clean file. Pricing tends to be higher at that leverage, which can make the coverage number harder to hit.
How much down payment do I need for a cash-out refinance?
Think in equity, not down payment. Cash-out tops out around 75% LTV on standard rentals, so you leave about 25% equity in the property. Short-term-rental collateral caps lower, around 70%. About 6 months of seasoning is the common expectation across the network. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Do I need reserves in addition to the down payment?
Usually, yes. Many files want about 6 months of PITIA after closing, and loans above $1,500,000 typically step up to about 9 months. Conservative rate-and-term files at modest leverage under that size can see reserves waived. It depends on the lender, the leverage, and the transaction.
Does buying through an LLC change the down payment?
Not by itself. Entity vesting is subject to lender program eligibility, but the leverage grid depends on credit, coverage, property type, and loan size. The entity structure alone does not raise or lower your percentage.
Can a bigger down payment fix a property that falls below 1.00?
Often it helps, since a smaller loan means a smaller payment and a higher ratio. Coverage below 1.00 is also available through select lenders in the network, with leverage and terms adjusted. Either route is reviewed file by file, so nothing here is assured.
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. As a mortgage broker, Lendmire arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. You can reach the team at 828-256-2183.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage focused on investor financing, arranging DSCR loans in 40 states plus Washington, D.C. — 41 markets total. Qualification is based on the property’s income rather than personal income documentation, subject to lender guidelines, making it a fit for LLC-held rentals and scaling portfolios. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
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 · How a 40-Year DSCR Loan Works as a 1099 Contractor · Individual DSCR Loans vs. a Blanket DSCR Loan for Three Airbnbs
Guides: DSCR Loans in Arkansas
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.