Can you get a DSCR Loan With No Down Payment?

The short answer is that getting 100% financing on a rental property with a DSCR loan is a not loan product available in the market. However, there are still several options you have to invest in real estate without tying up your cash in real estate equity.

Key Takeaways

• The max LTV% on a DSCR Loan is 80%.
• DSCR loans are an institutional fixed income investment product and are capped at 80% LTV.
• You can use the BRRRR method to invest in rental properties without tying up your cash in equity (See out BRRRR Calculator).
• You can use a personal line of credit or a friends & family loan for a down payment on a rental property.

Why Isn’t a 100% LTV DSCR Loan Available?

Debt service coverage ratio loans are based on the cashflow of an investment property exceeding the sum of the loan payments, insurance, taxes, and association fees. (Read: DSCR Calculations).

So, if your DSCR is above 1.0, why can’t you get 100% financing?

The answer is: DSCR loans are invested in by institutional investors like pension funds, hedge funds, banks, credit unions, and insurance companies. These institutional investors look for at least 20% equity in the real estate backed DSCR loans to protect themselves against real estate market retraction.

Investing Using The BRRRR Strategy

One way you can purchase an investment property without tying up your cash in real estate equity is with the BRRRR investment strategy.

BRRRR stands for: Buy, Rehab, Rent, Refinance, Repeat.

With this investment strategy, a real estate investor purchases a distressed property, renovates it, rents it, and then refinances the initial short term loan with a 30 YR DSCR loan.  This DSCR Loan will be based on the newly renovated property valuation and the new monthly rent.

With the BRRRR Strategy, the initial down payment made to acquire the distressed property is returned as cash upon refinancing.

The best way to check if your property is eligible for the BRRRR investment method is by checking the scenario with Ridge Street Capital’s BRRRR Calculator.

Using A Personal Loan For Your Down Payment

Another way to get a down payment for an investment property is to secure a personal line of credit from your bank. Personal lines of credit are based on your on personal income and debt to asset ratio. As a rule of thumb, a bank will typically provide a personal line of credit of up to 40% of your annual pre-tax personal income plus liquid assets.

Personal Line of Credit (Rule of Thumb) = 0.4 * (Annual Salary + Cash Savings)

The draw backs of this strategy is that personal lines of credit are typically reported monthly to credit bureaus. So, if you pull an amount from your personal line of credit to make a down payment on an investment property, your personal credit utilization ratio will increase, and likely lower your credit score until the debt is paid off.

Borrowing From Friends and Family

Borrowing money from your friends and family is another way to source capital for a down payment on an investment property. The benefit or borrowing from friends and family, is that you may be able to get favorable terms for borrowing. The downside of this strategy is that if your project is unsuccessful, your friends and family’s investment may be at risk.

Best DSCR Lender In 2026

Ridge Street Capital is an investment property lender in 35 States across the US. Our firm works with first time investors to experienced pro’s with 50+ projects under their belt. We have industry leading rates and our customer service, and communication is unmatched in the lending industry.

Getting pre-approved for a DSCR loan takes 2 minutes.

Submit your Pre-approval Form or Request a Term Sheet and a Ridge Street Capital rep will get back to you within the hour.

Frequently Asked Questions

Does a higher DSCR ratio reduce the down payment requirement?

No. The 80% LTV cap is set by the institutional investors who buy these loans on the secondary market, not by the property's cash flow performance. A DSCR of 1.5 carries the same minimum down payment as a DSCR of 1.05. The ratio affects pricing and approval probability, not the maximum loan-to-value.

Can equity from an existing rental property fund the down payment on a new DSCR loan?

Yes. A DSCR cash-out refinance on an existing rental property can generate funds that are then applied toward a new acquisition's down payment. The cash-out proceeds carry no restriction on deployment. The refinanced property must retain at least 25% equity after closing.

What cash reserves are required beyond the down payment on a DSCR loan?

Most DSCR lenders require 6 months of PITIA (principal, interest, taxes, insurance, and applicable HOA dues) in liquid reserves after closing costs and the down payment have been paid. These reserves must be documented separately and cannot come from the same funds being used to close. Investors calculating total capital requirements should treat the down payment, closing costs, and reserves as three distinct line items. The actual reserve amount depends on the loan size and property type, so running the numbers on a specific deal before committing capital to other uses is worth doing early.

Can 1031 exchange proceeds be used as the down payment on a DSCR loan?

Yes. When an investor sells a property through a 1031 exchange, the proceeds held by the qualified intermediary can be applied toward the down payment on the replacement property. A DSCR loan finances the remaining purchase price, qualifying on the replacement property's rental income rather than personal income documents. This lets investors redeploy equity from an appreciated asset into a new rental without pulling additional cash, while deferring capital gains tax on the original sale. How financing works inside a 1031 exchange depends on how the transaction is sequenced with the qualified intermediary.

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