A DSCR loan qualifies a rental on whether its rent covers the payment, not on your personal income. For investors with several properties, self-employed income or an LLC, that is often the simplest way to finance a rental in metro Atlanta, one of the country’s largest single-family rental markets.
The ratio
DSCR = monthly rent ÷ monthly payment, where the payment includes principal, interest, property taxes, insurance and homeowners association dues. We prefer 1.0 or higher.
| Rent | Payment | DSCR |
|---|---|---|
| $2,600 | $2,000 | 1.30 |
| $2,000 | $2,000 | 1.00 |
| $1,800 | $2,000 | 0.90 |
What decides the ratio in Georgia
- Property tax. Use the tax on your purchase price, without a homestead exemption. See our guide to Georgia property tax for investors.
- Insurance. An older roof or wiring can raise the premium. Get a quote early.
- HOA dues. Newer subdivisions often have them, and some associations limit leasing.
- Long-term rent. The City of Atlanta licenses short-term rentals only for an owner’s primary residence and one more unit, so we use leases or market rent.
Ways to make the numbers work
- A larger down payment lowers the payment.
- An interest-only period lowers the payment in the early years, and you can qualify on the interest-only payment.
- A 5-year prepayment penalty usually prices lower than a 3-year one.
- A new roof can lower the insurance premium.
Terms are on the DSCR rental loans page.