The Quick Read: Usually about 25% down on a purchase, because no-ratio loans placed through select lenders in Lendmire’s wholesale network generally cap at 75% loan-to-value (LTV), your home state does not change that cap, and credit score, property type and reserves still shape the lender’s final review. A no-ratio loan is not a zero-down loan. It skips the rent-coverage calculation, so lenders ask for more of your own equity in exchange.
- Purchase: leverage tops out at 75% LTV on this path, which means about 25% down.
- Refinance: rate-and-term refinances top out at 70% LTV, and cash-out refinances at 65% LTV.
- Credit: the minimum score on this path is 640, and stronger scores help the file.
- Out of state: the borrower’s home state is not a down payment lever.
- Availability: it is offered only through select lenders, generally for borrowers who already own a primary residence.
Key Terms Defined
No-ratio loan: A DSCR loan where the lender does not compute a rent-to-payment coverage ratio. Approval rests on credit and equity instead.
DSCR: Debt service coverage ratio, meaning the property’s monthly rent divided by its monthly housing obligation.
PITIA: Principal, interest, taxes, insurance and any association dues, which together make up the monthly housing obligation.
Reserves: Liquid cash you keep after closing, usually counted in months of PITIA.
Seasoning: The waiting period a lender wants between an event, like a purchase, and a later refinance.
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.
What Does “No-Ratio” Change About the Down Payment?
It changes it upward. A standard DSCR file shows the lender that rent covers the payment. A no-ratio file does not, so the lender leans on your equity and credit to cover that risk.
Across our network, standard DSCR purchases typically land at 75%-80% LTV, which means 20%-25% down. Select high-leverage programs reach 85% LTV (15% down) with roughly a 700+ score. The no-ratio path is tighter. It is available through select lenders, generally for borrowers who already own a primary residence. Purchases run to 75% LTV, so 25% down is the practical working number.
Down payment is just 100% minus the LTV cap. Whatever the matrix allows is what you bring.
A related point trips up many investors. Sub-1.00 coverage and no-ratio are two different paths. Many select programs start at 1.00 coverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. The no-ratio path computes no coverage ratio at all. It is its own program with its own limits. For a deeper look at the mechanics, Lendmire’s piece How a No-Ratio DSCR Loan Works for Out-of-State Investors covers the structure.
Does Being Out of State Change the Number?
No. Your home state is not a down payment factor. DSCR lending looks at the property, your credit and your equity. It does not look at your mailing address.
No state overlay is in force on the guidelines we work from. Every state takes the same standard purchase tiers. A Midwest duplex and a Southeast fourplex are measured against the same LTV caps, and your residence in a third state does not enter the matrix.
What does matter is the property itself. Eligible property types, appraised value and the transaction type all affect the LTV a lender will allow. Some property types are not offered at all. Manufactured homes (single- and double-wide), log homes and barndominiums fall outside these programs.
Distance does change your operating plan, though. You cannot self-manage from another state, so management costs belong in your cash-flow thinking. Those costs sit outside the loan’s qualification math.
How Much Down by Transaction Type
The table compares the no-ratio path against standard DSCR programs. Every figure is subject to lender guidelines and varies by borrower, property and loan scenario.
| Transaction | Standard DSCR (typical) | No-ratio path |
|---|---|---|
| Purchase | 75%-80% LTV | Up to 75% LTV |
| High-leverage purchase | Up to 85% LTV, ~700+ score | Not available |
| Rate-and-term refinance | Varies by program | Up to 70% LTV |
| Cash-out refinance | Up to 75% LTV | Up to 65% LTV |
| Minimum credit score | 620 floor in parts of network | 640 |
On a refinance, you are not making a down payment. You are leaving equity in the property. A 70% LTV rate-and-term refinance means 30% equity stays in. A 65% cash-out means 35% stays in. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Credit tiers matter on both paths. A 620 floor exists in parts of the network, and 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.
Why Does No-Ratio Ask for More Equity?
Because the lender gives up its best evidence. On a standard file, a rent that clears the payment tells the lender the property can carry itself. On a no-ratio file, that evidence is missing.
Equity fills the gap. If the property struggles, a lender with 25% or more of the value as a cushion is far better protected. That is why the caps drop as the transaction gets riskier. Purchases hold at 75%, rate-and-term refinances at 70%, and cash-out refinances at 65%.
There is a plain-English point about risk here. With no coverage test, you carry any monthly shortfall, not the lender. If rent falls short of the payment, the difference comes out of your pocket. Stronger credit and more equity are how you show you can absorb that.
Total Cash You Need Beyond the Down Payment
The down payment is the biggest check, but it is not the only one. Plan for four buckets.
1. Down payment: the equity the LTV cap requires.
2. Closing costs and prepaids: title, appraisal, insurance and escrow deposits.
3. Reserves: commonly around 6 months of PITIA. Conservative rate-and-term files at modest leverage under $1,500,000 can see reserves waived. Loans above that size typically step up to about 9 months.
4. A carry buffer: extra cash for months when rent runs short. This is especially smart on a no-ratio file.
Reserves vary by lender, leverage, loan size and transaction type. Treat the 6- and 9-month figures as common ranges, not universal rules. Loan sizes run up to $3,000,000 on standard programs (smaller balances available through select lenders), and above $2,500,000 the network generally holds to 30-year fixed structures.
Two Scenarios in Percentages and Ratios
Here are two ways the same investor could approach one purchase. Both are modeled assumptions, not market data.
Scenario one. You live in one state and own a primary residence there. You want a duplex in another state. Your score is 700 and rent comfortably covers the full monthly obligation, at a coverage ratio near 1.2x. A standard DSCR program is likely your best fit. You could look at 75%-80% LTV and keep more cash in your account. Every figure here varies by lender and program, and guidelines, property type, leverage, and credit profile all apply.
Scenario two. Same investor, same occupied duplex, but the rent comes in thin. Coverage sits below what most programs want. A select-lender sub-1.00 path might take it, with leverage and terms adjusted. The no-ratio path is the other option. It caps purchases at 75% LTV and wants a 640 score or better. Either way, expect to bring at least 25% down and hold meaningful reserves.
The pattern is consistent. Strong rent buys you leverage. Weak rent buys you a larger equity check.
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.
A Broker’s Read on Down Payment Mistakes
Across the files we place, the most common surprise is not the down payment. It is the gap between the down payment and total cash needed. Investors budget for the LTV percentage, then discover reserves and closing costs sit on top of it. Running the full cash picture before you go under contract prevents that.
The second surprise is mixing up coverage with cash flow. Clearing 1.00 on a DSCR file only means rent matches PITIA. Repairs, vacancy, management, utilities and capital expenses all sit outside that calculation. A property can clear the ratio and still lose money each month.
Where the Down Payment Can Come From
Your own capital is the cleanest source. Most programs we place files with want to see the down payment documented from your bank statements, with funds in your account long enough to show they are yours.
Cash-out proceeds from another property are a common source. The usual expectation is about 6 months of seasoning on that property first, and cash-out refinances top out around 75% LTV across most of the network. On the no-ratio path, cash-out caps at 65%. That is why the plan of putting 25% down and repeating eventually hits a capital wall. Recycling equity takes time. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Borrowing the down payment is the weak spot. Most programs do not want a second loan at closing funding your equity. They want your own money in the deal. Gift funds and seller credits depend on the specific program, so ask before you count on them.
True zero-down does not exist on a standard DSCR program. Anyone who describes it that way is usually describing a cash-out on another property used as the down payment, which is still your equity.
When the No-Ratio Path Is the Wrong Tool
Use it only if standard DSCR does not fit. If rent covers the payment, a standard program usually gives you more leverage and fewer restrictions. You could reach 75%-80% LTV, and sometimes 85% with a 700+ score, instead of 75% at best.
The no-ratio path makes sense when current rent is thin or hard to document but your credit and equity are strong. The property still has to be occupied, because vacant properties are ineligible on this path.
It is also a poor fit for first-time homebuyers, for borrowers with a thin credit file, and for anyone who cannot absorb a monthly shortfall. If you want the qualification side explained step by step, Lendmire’s guide How to Qualify for a No-Ratio DSCR Loan for Out-of-State Investors walks through it. For the broader program picture, see the complete DSCR loans guide.
Why These Loans Follow Their Own Rules
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 CFPB’s Truth in Lending guide treats credit to acquire rental property that the borrower does not occupy as business-purpose credit. The Federal Register rulemaking says investment-purpose loans are business-purpose loans. That is why leverage comes from lender matrices, not a federal down payment rule.
Questions to Ask Before You Commit
- What is the maximum LTV for my score on a purchase, and does it drop on the no-ratio path?
- Is this property type eligible, and is the unit occupied?
- How many months of reserves does this loan size require?
- Will you accept my down payment source, and how much seasoning does it need?
- Does a larger down payment improve my terms?
Vesting the loan in an LLC is possible, subject to lender program eligibility. A larger down payment lowers the monthly payment and can lift the DSCR. It never erases leverage caps, credit floors, reserve rules or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage. Tax treatment varies; consult a qualified professional.
Frequently Asked Questions
Is there a zero-down no-ratio DSCR loan?
No. A no-ratio loan always needs real equity. On the no-ratio path, purchases generally cap at 75% LTV, so plan on about 25% down. Select programs reach 85% LTV on standard DSCR files with a 700+ score, but that is the lowest down payment in our network, and it is not a no-ratio option.
Does living in another state raise my down payment?
Not directly. The borrower’s home state is not a stated factor, and no state overlay is in force on the guidelines we work from. The property’s type, value and transaction type do affect the LTV a lender allows.
Can I use a no-ratio loan to buy my first rental?
It depends on your profile. The path is available only through select lenders, generally for borrowers who already own a primary residence. First-time homebuyers are ineligible, and so are files with one or no credit score. The minimum score is 640.
How much equity stays in the property on a no-ratio refinance?
Rate-and-term refinances top out at 70% LTV, so 30% equity stays in. Cash-out refinances top out at 65% LTV, so 35% stays in. Programs change and every file is underwritten individually. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Do I still need reserves on a no-ratio loan?
Yes, in most cases. Reserves commonly run around 6 months of PITIA, though they vary by lender, leverage, loan size and transaction type. Loans above $1,500,000 typically step up to about 9 months.
Next Step
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. Lendmire is a mortgage broker that arranges financing through select lenders in its wholesale network, with DSCR programs in 41 markets, including Washington, D.C. Terms are subject to lender guidelines. This is not a commitment to lend. The calculator on this page gives an illustrative estimate only.
Investors who buy across state lines tend to do best when they treat the down payment as the first line of a four-line cash budget, not the whole plan.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income rather than personal income, subject to lender and program guidelines, a fit for self-employed investors and LLC-owned portfolios. Lendmire was recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.
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References
1. CFPB Truth in Lending guide
2. Federal Register, CFPB ability-to-repay and qualified mortgage final rule
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How High a DSCR Ratio Does a 40-Year Super Jumbo DSCR Loan Need? · How to Document a Jumbo DSCR Loan · How Much Down Payment Does a Large-Balance DSCR Loan Need?
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.