15% Down DSCR Loan: How to Buy a Rental Property With Less Cash
Most lenders require 20% to 25% down for a DSCR loan. But there’s a program that lets qualified investors get in at 15% down — and that extra 5% savings can make a significant difference when you’re trying to scale a rental portfolio. Here’s everything you need to know about how it works and whether you qualify.
Why 15% Down Matters for Investors
The math is simple. Every dollar you don’t put into a down payment is a dollar you can deploy into another property. At 15% down instead of 20%, you’re freeing up capital that can go toward your next acquisition. Over multiple properties, that compounds quickly — which is exactly why this program has become popular with investors who are actively trying to grow their portfolios.
How the Loan Works
This is still a DSCR loan at its core — meaning the lender qualifies you based on the rental income the property produces, not your personal income. No W2s, no tax returns, no debt-to-income evaluation. The appraiser performs a 1007 rent schedule, looking at comparable long-term rental properties to determine what the subject property would rent for.
The key number is still the 1:1 DSCR ratio — the monthly rent must cover the full mortgage payment including principal, interest, taxes, insurance, and HOA. That requirement doesn’t go away at 15% down. If anything, hitting that ratio becomes harder because a lower down payment means a higher loan balance and a higher monthly payment.
Why Not Every Property Qualifies
This is important to understand going in. At 15% down, your mortgage payment is higher than it would be at 20% or 25% down. That means the rental income needs to stretch further to cover it. In practice, a lot of single-family properties simply won’t generate enough rent to hit that 1:1 ratio at 15% down — which is why this program isn’t widely offered and not every deal will work.
The properties that tend to qualify most consistently are 2-4 unit properties. Multi-unit properties produce more total rental income, which makes it much easier to cover the full mortgage payment. In fact, the majority of 15% down DSCR loans tend to happen on 2-4 unit properties for exactly this reason.
Qualification Requirements
- 700+ credit score — required at 15% down. The better your credit, the better your rate and overall terms
- 15% down payment — no PMI required, which helps keep the overall cost of the loan competitive
- 1:1 DSCR ratio — the rental income must cover the full PITI payment
- Own your primary residence — underwriters want to see that you currently own your home
- 12 months of landlord or rental property experience — this program is not designed for first-time real estate investors
What Properties Are Eligible
- Single family (1-unit) properties
- 2-4 unit rental properties
Not eligible:
- Manufactured homes
- Condos
No PMI — A Significant Advantage
One of the underrated benefits of this program is that there’s no private mortgage insurance even at 15% down. On a conventional loan, putting less than 20% down typically means paying PMI monthly until you hit enough equity. With this DSCR program, that cost doesn’t exist — which makes the overall loan terms more competitive than you might expect.
Is This Program Right for You?
If you’re an experienced investor who owns your primary residence, has at least a 700 credit score, and is targeting a property — especially a multi-unit — with strong rental income relative to the purchase price, the 15% down DSCR loan is worth exploring. It’s one of the better tools available for scaling a rental portfolio without tying up more cash than necessary.
If you’re a first-time investor or the property you’re looking at has thin rental comps, a standard 20-25% down DSCR loan is likely the more realistic path.
FAQ
What is the minimum down payment for a DSCR loan? Most lenders require 20-25% down. A 15% down option exists but requires stronger credit, landlord experience, and a property that hits the 1:1 DSCR ratio at that lower down payment.
Do I need good credit for a 15% down DSCR loan? Yes. A minimum 700 credit score is required. The stronger your credit, the better your rate and terms.
Is there PMI on a 15% down DSCR loan? No. Unlike conventional loans, there is no PMI on this program even at 15% down.
What types of properties qualify for 15% down? Single family and 2-4 unit rental properties. Manufactured homes and condos are not eligible.
Do I need rental property experience? Yes. Underwriters want to see that you currently own your primary residence and have at least 12 months of landlord or rental property experience.
Why do most 15% down DSCR loans happen on multi-unit properties? Multi-unit properties generate more rental income, making it easier to hit the 1:1 DSCR ratio required at the lower down payment.
Interested in getting preapproved for a 15% down DSCR loan? Reach out and let’s run the numbers on your deal. Austin Clarence | NMLS #1509690 | (602) 737-2576 | aclarence@nexamortgage.com