The average DSCR lender requires a minimum loan amount of $100K to $150K, effectively cutting out real estate investors purchasing income-producing rental properties in affordable markets like Indiana, Alabama, and Mississippi. 

Ridge Street Capital is one of the few lenders extending that flexibility to loans under $100K, helping investors access funding for smaller, high-yield properties that generate consistent positive cash flow.

In this article, we’ll explore why small-balance DSCR loans are rare, what alternatives are available, and how Ridge Street’s program helps investors finance income-generating properties that other lenders won’t finance.

What Is a DSCR Loan and How Does It Work

A DSCR loan is a type of real estate financing designed specifically for investors. Instead of verifying your personal income or employment, lenders qualify you based on how much rental income the property generates compared to its debt payments, which is the property’s capability to pay for itself.

The DSCR ratio measures this balance: DSCR = Net Operating Income ÷ Total Debt Payments.

A ratio above 1.0 means the property produces enough cash flow to cover the loan, while a higher ratio (like 1.2 or 1.25) signals stronger performance and lower risk.

Because qualification is based on property income, these loans are a popular option for investors building or scaling portfolios through LLCs, partnerships, or holding companies. They also provide the following:

• Flexible underwriting without strict income documentation.
• DSCR Loans can close in an LLC
• Portfolio scalability, since loans can be repeated across multiple properties.

Whether you’re financing your first rental or managing a larger portfolio, DSCR loans offer a straightforward way to leverage cash-flowing assets for growth.

The Challenge with DSCR Loans Under $100K

For most investors, the biggest roadblock with small-balance properties is finding a lender willing to finance it. While DSCR loans are designed to make qualifying easier, most lenders simply won’t issue them for amounts between $55,000–$99,000.

Every loan, whether it's $75,000 or $750,000, requires the same underwriting, legal review, and closing support. Those costs don’t scale down, so smaller loans require the same workload for far less return for lenders. As such, most lenders have increased their loan minimums to keep their lending operation profitable.

That’s why so many investors buying affordable rentals under 100k struggle to find financing options.

Ridge Street’s DSCR Loans Under $100K

Ridge Street Capital is one of the few lenders offering a true small-balance DSCR loan program, designed specifically for investors purchasing properties below $100,000.

Instead of turning away smaller deals, we have structured a program that balances lender risk with investor accessibility while accounting for the higher costs of underwriting and closing small balance loans.

Ridge Street’s Small-Balance DSCR Loan Program

Program Details:

*Note: In Ohio and Pennsylvania, we are no longer providing loans under $100K. All other states are eligible for the Small Balance DSCR Loan Program.

Example: Financing a $90K Duplex

Under Ridge Street’s small-balance program, a duplex purchased for $90K, with a monthly rent of $1,300, and DSCR of 1.15+ would be eligible for the following loan to a creditworthy borrower:

• Loan Amount: $72,000
• LTV: 80%
• Rate: 7.5%
• Origination Fee: $2,500
• Legal & Underwriting Fee: $1,995

Again, the closing costs can be proportionally high in comparison to the size of the loan but this financing option is still an excellent way to get into a deal under $100K.

Other Options for Investors Seeking DSCR Loans Under $100K

While Ridge Street Capital offers one of the only dedicated DSCR programs for loans below $100,000, a few alternative paths may also be worth exploring:

• Local and community lenders: Some regional banks or credit unions occasionally finance smaller investment properties using DSCR or stated-income models.
• Portfolio bundling: Combine multiple small properties into one blanket loan to meet a lender’s minimum balance requirement.
• Cash-out refinance workaround: Use equity from existing properties to consolidate or fund smaller acquisitions.

These alternatives can work in niche cases, but they often come with higher rates, shorter terms, or added complexity, making Ridge Street’s purpose-built program the most straightforward option for small-balance DSCR financing.

Debt Service Coverage Ratio Loans Under 100k, FAQs

Do I need cash reserves for a DSCR loan?

Yes. Ridge Street requires 6 months of mortgage payments (PITIA) in cash reserves plus any closing costs. This requirement applies even when the DSCR ratio is strong.

Are DSCR loans available for short-term rentals or Airbnb properties?

Yes. DSCR loans can be used for income-producing rentals, including short-term or vacation rentals, as long as the property has a reliable income history or the AirDNA projected cashflow supports a DSCR above 1.0.

Can I use a DSCR loan for a fix-and-flip or distressed property?

No. DSCR loans are intended for move-in-ready, income-generating properties. Distressed or renovation projects require hard-money financing instead.