Texas added roughly 115,000 new apartments in the year ending Q1 2025, accounting for approximately 18% of all national new construction, according to market analysis from Prestige RPM. That supply wave has pushed large multifamily vacancy elevated in Dallas, Austin, and San Antonio. The single-family rental market tells a different story: suburban SFR vacancy in major Texas metros is holding at 4% to 6%, and investors who understand how to underwrite the numbers correctly are still finding viable deals.
A DSCR loan qualifies the property on its rental income rather than the borrower’s personal income. LendSure Home Loans offers DSCR financing for Texas investment properties with no tax returns, no W-2s, and no personal debt-to-income calculation. If you have a property in mind, our team can run a DSCR scenario based on the purchase price, expected rent, and financing terms before you make an offer.
What DSCR Measures — and What It Doesn’t
DSCR stands for Debt Service Coverage Ratio. It measures whether the income generated by an investment property is sufficient relative to the property’s debt obligation. The basic concept:
Qualifying monthly rent / Qualifying monthly housing expense = DSCR
A ratio of 1.0 means the qualifying rent exactly covers the qualifying expense. A ratio above 1.0 means there is cushion. A ratio below 1.0 means qualifying rent falls short.
LendSure calculates DSCR by dividing the property’s gross rental income by its monthly PITIA: principal, interest, taxes, insurance, and association fees. This is not the same as subtracting every real-world operating expense an investor will incur. IRS Publication 527 identifies common rental-property expenses including maintenance, management fees, repairs, utilities, commissions, and depreciation. The lender’s qualifying DSCR calculation and the investor’s actual cash flow are two separate calculations — passing one does not guarantee the other.
Why Texas Taxes and Insurance Change the DSCR Math
This is the most commonly overlooked part of Texas DSCR underwriting. Two properties renting for exactly the same amount can produce very different DSCR ratios because of differences in taxes, insurance, and HOA obligations.
Consider two Texas properties with identical rent and financing:
Property A Monthly rent: $2,800 | P&I: $1,700 | Taxes: $500 | Insurance: $150 | HOA: $0 Total PITIA: $2,350 | Illustrative DSCR: 1.19
Property B Monthly rent: $2,800 | P&I: $1,700 | Taxes: $750 | Insurance: $250 | HOA: $150 Total PITIA: $2,850 | Illustrative DSCR: 0.98
Same purchase price, same rent, same interest rate — different DSCR. The difference is taxes, insurance, and HOA. Before making an offer on a Texas rental, obtain accurate estimates for all three.
The Texas Property Tax Due Diligence Problem
Texas does not have a state property tax. Taxes are assessed and administered locally by counties, cities, school districts, and other taxing units, according to the Texas Comptroller. Rates vary significantly across the state and even within a single metro.
The more important issue for DSCR investors: the seller’s current tax bill may not reflect what you will owe. Texas residence homestead exemptions require the owner to occupy the property as their principal residence. If you are buying someone’s former primary residence as an investment rental, the homestead exemption that reduced their taxes does not transfer to you. The post-acquisition investment-property tax bill can be meaningfully higher than the listing shows.
Insurance for Texas Rentals
The Texas Department of Insurance notes that most homeowners insurance policies either will not cover damage to a rental property or may significantly limit coverage, and recommends that landlords obtain appropriate landlord insurance for traditional long-term rentals.
If you are planning a short-term rental, TDI notes that standard policies may not adequately cover paying guests either. Obtain an insurance estimate appropriate for your intended use before calculating the DSCR, because the cost will differ from an owner-occupied policy.
How Qualifying Rent Is Determined
One of the most common borrower questions is what happens when the property is vacant at the time of purchase. LendSure uses the following approach:
For vacant units or purchase transactions with no existing lease, LendSure uses the appraiser’s market rent estimate from Form 1007, the rent schedule included with the appraisal. All units are assumed rented at market rate for qualification purposes. For properties with an existing lease, LendSure uses the lesser of the current lease amount or the appraiser’s market rent estimate for that unit.
Short-term rental income from platforms like Airbnb and Vrbo is accepted for qualification with a 12-month earnings history. The qualifying income figure is not simply the gross revenue from the platform — the lender’s methodology for documenting and counting short-term rental income should be confirmed before you build the deal model around it.
LendSure’s Texas DSCR Program
LendSure’s DSCR program qualifies on property cash flow only. No tax returns, no W-2s, and no personal DTI calculation are required. The loan closes in an LLC, which keeps it separate from the borrower’s personal financial profile.
Loan parameters:
- Loan amounts up to $3,000,000
- 1–4 unit properties: purchase up to 85% LTV; rate-and-term refinance up to 80%; cash-out up to 75%
- 5–10 unit properties: purchase up to 75% LTV; rate-and-term up to 70%; cash-out up to 65%
- DSCR ratios as low as 0.75, with exceptions considered to 0.25
- No limit on number of properties owned; up to 10 loans financed simultaneously
- Non-warrantable condos and condotels permitted
- Interest-only option: 10-year IO on a 40-year term
- Short-term rental income accepted with 12-month documentation
The equity contribution required at purchase depends on the LTV tier applicable to the transaction. Cash-out refinances are available up to $500,000, with exceptions to $3,000,000.
DSCR vs. a Conventional Investment Property Loan
Borrowers frequently compare these two options. The difference is not just documentation — it is the structure of how you qualify.
With a conventional investment loan, the lender evaluates the borrower’s personal income, debts, credit, assets, and the property together. Personal DTI matters. Tax returns and W-2s are typically required. Rental income can be considered, but it is layered into a broader personal qualifying profile.
With a DSCR loan, the central qualifying question is whether the property’s rental income supports the debt obligation under the lender’s program. Personal income is not used to qualify. This is why investors with strong cash flow but complex tax returns, significant write-offs, or multiple business entities investigate DSCR financing: the property qualifies, not the borrower’s W-2.
Both loan types still care about credit profile, asset reserves, and the property itself. DSCR is not a no-documentation product — it is differently documented, with the property’s income at the center.
How to Qualify: A Step-by-Step Framework
- Identify an eligible property. Confirm the property type and intended rental use fit LendSure’s program. 1 to 10 unit residential properties are eligible, including condos and condotels.
- Estimate qualifying rent. Use a current lease, a rental market analysis, or the appraiser’s Form 1007 market rent estimate depending on the property’s circumstances.
- Build the full PITIA. Estimate principal and interest using the expected loan amount and rate. Obtain an actual property tax estimate for your ownership scenario — not the seller’s current bill. Get a landlord insurance quote. Include HOA dues where applicable.
- Calculate the estimated DSCR. Divide the qualifying monthly rent by the monthly PITIA.
- Determine cash required. Add the equity contribution (based on purchase price and LTV), estimated closing costs, and any required reserves.
- Stress-test the investment. Separately model the property’s actual operating cash flow after vacancy, management fees, maintenance, and repairs. The lender’s DSCR test and your investment return are two different calculations.
Ready to Run a Texas DSCR Scenario?
For investment transactions, you can share the property details with LendSure’s team before submitting a full application.
Frequently Asked Questions
Does a Texas DSCR loan require tax returns or W-2s?
No. LendSure’s DSCR program qualifies on the property’s rental income rather than personal income documentation. Tax returns, W-2s, and personal debt-to-income calculations are not required. Credit profile, asset reserves, and property eligibility still matter. DSCR is a differently documented loan, not a no-documentation loan.
How much do I need down for a Texas DSCR loan?
LendSure finances up to 85% LTV on 1 to 4 unit purchase transactions, meaning the equity contribution at purchase is at least 15%. For 5 to 10 unit properties, the maximum purchase LTV is 75%. The total cash required at closing includes the equity contribution, closing costs, and any required reserves — not the equity contribution alone.
Will the seller’s property tax bill reflect what I will owe as a rental investor?
Not necessarily. Texas residence homestead exemptions, which can significantly reduce a property owner’s tax bill, require the owner to occupy the property as their principal residence. If you are purchasing someone’s former primary home as a rental investment, their current tax bill may understate what you will owe as a non-owner investor. Obtain a post-acquisition tax estimate for your specific ownership scenario before finalizing the DSCR calculation.
Can I use short-term rental income from Airbnb or Vrbo to qualify?
Yes. LendSure accepts short-term rental income with a 12-month earnings history from the platform. The qualifying income figure follows LendSure’s methodology for short-term rental documentation, which should be confirmed before building the deal model around projected platform revenue.
What DSCR ratio does LendSure require?
LendSure commonly works with DSCR ratios at or above 1.0. Ratios as low as 0.75 are considered, with exceptions to 0.25 on a case-by-case basis. Lower ratios result in lower leverage and different pricing — the ratio drives both approval and loan structure.
Does passing the DSCR test mean the investment will have positive cash flow?
Not automatically. The lender’s DSCR calculation determines whether the loan qualifies under the program. It does not account for every real-world expense an investor will incur, including vacancy, property management fees, maintenance, repairs, capital expenditures, and owner-paid utilities. Investors should model both the qualifying DSCR and the property’s actual expected operating cash flow before making an offer.
