A DSCR of 1.0 means the property's gross rental income exactly covers the monthly PITIA payment. Most lenders treat this as the floor. But real deals do not always pencil at exactly 1.0. Properties in high-cost markets, recent acquisitions with conservative initial rents, or 2-4 unit properties with one vacancy can push the ratio below 1.0 even on an otherwise solid deal. A small number of lenders will underwrite these files if the borrower brings enough equity.
How Low Each Lender Will Go
- ✦Acra Lending: DSCR as low as 0.80; requires larger equity position; 620+ FICO
- ✦New Silver: DSCR as low as 0.75; primarily for experienced investors; underwriting focuses on total portfolio strength
- ✦Griffin Funding: DSCR as low as 0.75; requires 25-30% equity depending on FICO
- ✦Change Wholesale: DSCR as low as 0.75; asset-rich scenarios considered; no-ratio option available for borrowers with significant liquid reserves
- ✦Carrington Investor Advantage: no-ratio DSCR option for borrowers with strong reserves who prefer not to document rental income at all
What Compensates for the Lower Ratio
Lenders willing to go below 1.0 are not abandoning credit discipline -- they are substituting equity for cash flow coverage. The typical compensating factors are a lower LTV (often 65-70% rather than 80%), higher FICO (720+ opens more doors than the minimum floor), and demonstrated investor experience. A borrower who owns six properties and has a consistent track record of managing them is a fundamentally different risk than a first-time investor with a tight DSCR.
When No-Ratio Makes More Sense Than Sub-1.0 DSCR
If a property has genuinely weak cash flow relative to its value, the no-ratio DSCR path may be cleaner than fighting for sub-1.0 approval. No-ratio DSCR underwriting skips the income calculation entirely and focuses on LTV, FICO, and reserves. Change Wholesale and Carrington both offer this structure. The trade-off is a more conservative maximum LTV -- usually 65-70% rather than 75-80%.
Scenarios Where Sub-1.0 Occurs and Still Closes
- ✦Newly acquired property with below-market lease expiring in 3-6 months; current rent is the qualifying figure, not the projected market rent
- ✦2-4 unit with one unit vacant at application; lender uses actual documented rent from occupied units only
- ✦High-value property in a low-rent market where appreciation is the investment thesis, not current yield
- ✦Experienced investor with strong balance sheet who accepts a higher rate in exchange for lender flexibility
Aria knows the DSCR floors, LTV requirements, and FICO thresholds for every major sub-1.0 lender. Ask Aria to route a specific DSCR deal at vicariointel.com.
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