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DSCR loans for New York rental property
Long-term financing approved on what the property earns. Two- to four-family homes, condos, single-family rentals and small multifamily, with no tax returns or employment check.
DSCR loan terms
| To buy | up to 85% LTV |
| Cash-out refinance | up to 80% LTV |
| Credit scores from | 600 |
| Fixed terms | 5 to 30 years |
| Prepayment choices | 3-year, 5-year or none |
| Typical closing | about 30 days |
At a 600 score the limit is 70% loan-to-value. Stronger credit qualifies for up to 85% on a purchase.
DSCR in plain terms
DSCR is short for debt service coverage ratio. It answers one question: does the rent pay the mortgage? If it does, the loan can be approved without looking at your personal income.
DSCR = monthly rent ÷ monthly payment. The payment counts principal, interest, property taxes, insurance and any condo common charges.
| Rent | Payment | DSCR | Reading |
|---|---|---|---|
| $6,500 | $5,000 | 1.30 | Income is 30% above the payment |
| $5,000 | $5,000 | 1.00 | Income equals the payment |
| $4,500 | $5,000 | 0.90 | Income is short; expect less leverage or a higher rate |
We prefer a ratio of 1.0 or higher. A strong borrower can qualify under 1.0 with lower leverage, and there is a no-DSCR option up to 75% loan-to-value at a higher rate.
Which rent counts in New York
- Long-term rentals. Year-long leases are the core of the market across the boroughs and the suburbs. We use the lease or the market rent from the appraisal.
- Two- to four-family homes. Every legal unit’s rent counts. The certificate of occupancy or the city’s records should show the unit count you are renting.
- Rent-regulated units. Many apartment buildings of six or more units built before 1974 are rent stabilized, and since 2019 state law has made it very hard to deregulate an apartment or raise the rent for improvements. Good Cause Eviction, in effect in New York City since 2024, limits rent increases and evictions in most market-rate rentals. Exemptions include owners of 10 or fewer units statewide, buildings first occupied on or after January 1, 2009, and units renting above 245% of fair market rent.
- Short-term rentals. New York City’s Local Law 18 allows a short-term rental only when the host lives in the home, is present during the stay, has registered with the Mayor’s Office of Special Enforcement, and hosts no more than two guests. Renting out a whole house or apartment for less than 30 days is not allowed, so investor-owned property in the city is underwritten on long-term rent. Towns on Long Island and in Westchester set their own rules, and many require a permit or limit short stays.
Costs that decide whether a New York deal clears 1.0
- Property tax. New York City taxes one- to three-family homes as Class 1, where assessed value can rise no more than 6% a year and 20% over five years, and taxes buildings of four or more units, condos and co-ops as Class 2. A recent purchase can be assessed well below its price, so budget with the actual tax bill, not an estimate.
- Mortgage recording tax. New York City charges a mortgage recording tax when a loan is recorded. On one- to three-family homes and condos the borrower’s share is about 1.8% of a loan under $500,000 and 1.925% at $500,000 or more. On commercial property and buildings of four or more units it is 2.8% at $500,000 or more. Outside the city the rate is lower and varies by county.
- Insurance and common charges. Get real quotes, and for a condo the building’s budget and any assessments, before you make an offer.
- Lead paint duties. Paint in New York City buildings built before 1960 is presumed to contain lead. Local Law 1 sets safe work practices and extra duties when a child under six lives in a unit, and Local Law 31 requires an XRF lead paint test in rental units of pre-1960 buildings, including rentals in one- and two-family homes.
Loan options
- Fixed terms from 5 to 30 years. The 10/1 interest-only and the 30-year fully amortized loan are chosen most often.
- Qualifying on the interest-only payment is available.
- A 3-year or 5-year prepayment penalty. The 5-year option usually prices about 0.25 to 0.5% lower. No penalty is available at a higher rate.
- One property or a whole portfolio.
Refinancing after a renovation or a build
If you renovate or build a property and decide to keep it, a DSCR loan replaces the short-term fix and flip or construction loan with long-term debt. A cash-out refinance at up to 80% loan-to-value can hand back much of the cash you put in.
Documents we ask for
- Loan application
- Signed purchase contract, or your original closing statement for a refinance
- The leases and a rent roll, or market rent from the appraisal
- Two months of bank statements
- Insurance, attorney and title contacts, and someone to let the appraiser in
- For a condo: the building budget and any assessment notices
- For an LLC: articles of organization, EIN letter and operating agreement
The full list is in our hard money loan document checklist.
DSCR loans: common questions
We prefer 1.0 or higher, which means the rent covers the full payment. Strong borrowers can qualify below 1.0 with lower leverage, and a no-DSCR program is available up to 75% loan-to-value at a higher rate.
Generally not. Local Law 18 bars renting out a whole home or apartment for less than 30 days, so we underwrite city rentals on long-term rent.
Yes, when each unit is legal. Every unit’s rent goes into the DSCR.
It can limit how fast you raise rents in a covered unit, so we look at in-place rents, not just market rent. Owners of 10 or fewer units statewide, newer buildings and high-rent units are exempt.
The minimum is 600, at up to 70% loan-to-value. Higher scores qualify for up to 85% of the purchase price.
No. A DSCR loan is approved on the property’s rental income. There is no employment, tax return or debt-to-income review.
No. These are business-purpose loans and are not reported on your personal credit like a conventional mortgage. There is no cap on how many properties we will finance for you.
Buying or refinancing a New York rental?
Send the address, the price and what you plan to do with the property. We will reply with the leverage and pricing that fit your deal.