DSCR loan down payment: how much do you actually need?
Written by Jay Beach, SVP, Investor Portfolio Lending · Reviewed by the Mortava lending team · Updated
The down payment is the biggest cash line item in any rental property purchase, and on a DSCR loan it is set by leverage tiers rather than your personal income. The short answer: 15% down is the minimum on a purchase at 85% LTV, but your true cash to close also includes reserves and closing costs. This guide walks through the tiers that determine your leverage, the cash-out refinance caps, and a complete worked example.
The minimum down payment on a DSCR loan is typically 15% of the purchase price, based on maximum leverage of 85% LTV for strong borrowers. Your exact requirement depends on your credit score, the property’s DSCR ratio, and the transaction type. Cash-out refinances are generally capped near 80% CLTV, and most lenders also require roughly six months of reserves plus closing costs on top of the down payment.
- The minimum DSCR loan down payment is 15% on a purchase when leverage reaches 85% LTV; weaker credit or lower coverage ratios push the requirement higher.
- FICO and DSCR tiers drive maximum leverage — 640 is a common minimum score, and a DSCR at or above 1.00 unlocks the strongest terms.
- Cash-out refinances are typically capped around 80% CLTV, so plan to retain more equity than a purchase requires.
- Budget beyond the down payment: roughly six months of documented reserves plus approximately 2–5% of the price in closing costs is typical.
- A larger down payment lowers the monthly payment, which raises the DSCR ratio — sometimes moving the deal into a better pricing tier.
The minimum down payment on a DSCR loan is typically 15%
At lenders offering maximum leverage of 85% loan-to-value (LTV) — including Mortava — the minimum down payment on a DSCR loan is 15% of the purchase price. That top-tier leverage is generally reserved for borrowers with strong credit and properties whose rental income comfortably covers the proposed payment.
Most investors should plan for 15–25% down depending on credit score, the property’s debt service coverage ratio, and the transaction type. Because DSCR loans are business-purpose loans underwritten to the property’s cash flow rather than your personal income, leverage — not income documentation — is the main variable that changes from deal to deal.
If you’re new to the product, start with our guide to how DSCR loans work, then come back here to size your cash to close.
How LTV determines your down payment
Your down payment is simply the inverse of your maximum LTV: down payment percentage = 100% minus max LTV. If a lender approves 85% LTV on a $400,000 purchase, the loan is $340,000 and your down payment is $60,000.
LTV caps move with risk. Higher credit scores, DSCR ratios at or above 1.00, standard 1–4 unit property types, and purchase transactions support the highest leverage. Lower scores, sub-1.00 coverage, short-term-rental income, and cash-out refinances all tend to reduce the maximum LTV — which raises the required down payment dollar for dollar.
Before you write an offer, run the rent, payment, and leverage through a DSCR calculator so you know which tier your deal lands in.
How FICO and DSCR ratio tiers set your max leverage
Two tiers drive nearly every DSCR leverage decision: your FICO score and the property’s DSCR ratio. Lenders price and cap leverage on a grid, so moving up one tier in either dimension can unlock five points or more of additional LTV — a directly smaller down payment.
On the credit side, 640 is a common minimum score for DSCR programs, but maximum leverage typically requires scores in the 700s. Improving your score before you apply can translate directly into thousands of dollars less cash at closing.
On the cash-flow side, a DSCR of 1.00 or higher — meaning the rent fully covers the payment — supports the strongest terms. Some lenders, including Mortava, also underwrite sub-1.00 tiers (0.75–0.99 and 0.50–0.74, with 0.50 as the floor) at reduced leverage, so a property that doesn’t fully cover its payment can still be financed with a larger down payment.
The exact grid varies by lender, but the pattern is consistent:
- DSCR at or above 1.00 with strong credit: highest leverage, up to 85% LTV on purchases
- DSCR of 0.75–0.99: reduced maximum LTV, typically requiring roughly 5–10% more down
- DSCR of 0.50–0.74: lowest coverage tier, with a materially larger down payment expected
- FICO below roughly 700: maximum LTV usually steps down even when the DSCR is strong
DSCR down payment by scenario
The table below shows how down payment requirements commonly scale across borrower and property scenarios. It is illustrative — not a quote or a commitment to lend — but it reflects how DSCR leverage grids generally work across the market.
Short-term rentals often carry slightly lower maximum leverage because projected STR income is more variable than a long-term lease. See our Airbnb and STR DSCR program for how vacation-rental income is underwritten.
Comparing options across the market? Our breakdown of the best DSCR lenders covers how leverage caps and program minimums differ by lender type.
| Scenario | FICO (illustrative) | DSCR ratio | Typical max LTV | Minimum down payment |
|---|---|---|---|---|
| Strong purchase | 740+ | 1.20+ | Up to 85% | 15% |
| Standard purchase | 700–739 | 1.00–1.19 | ~80% | 20% |
| Lower credit score | 640–699 | 1.00+ | ~75% | 25% |
| Sub-1.00 coverage | 700+ | 0.75–0.99 | ~70–75% | 25–30% |
| Low coverage | 700+ | 0.50–0.74 | ~65–70% | 30–35% |
| Short-term rental (STR) | 700+ | 1.00+ | ~75–80% | 20–25% |
Cash-out refinances: plan for about 80% CLTV
Cash-out refinances on DSCR loans are typically capped around 80% combined loan-to-value (CLTV) — lower than the 85% available on purchases. In practice, you must retain at least roughly 20% equity in the property after the new loan funds.
The math is straightforward: a property appraising at $500,000 at an 80% CLTV cap supports a maximum new loan of about $400,000. Your net proceeds are that maximum loan minus the existing payoff and closing costs.
For BRRRR investors, this cap is the number that matters most, because the refinance step determines how much of your original cash gets recycled into the next deal. Our BRRRR method guide walks through the refinance step end to end.
Reserves: about six months of payments, documented not spent
Most DSCR lenders require approximately six months of reserves — verified liquid funds equal to roughly six monthly housing payments (principal, interest, taxes, insurance, and any association dues, together called PITIA) — on top of your down payment and closing costs.
Reserves are not paid at closing; they simply must be documented in your accounts. Acceptable sources typically include checking, savings, and brokerage accounts, and often a percentage of retirement account balances. Requirements can rise with larger loan amounts or when you carry multiple financed properties.
Treat reserves as part of your real acquisition budget. An investor who saves exactly the down payment and nothing more usually cannot close, because the file fails the reserve check even when the leverage and DSCR both work.
Closing costs: the cash beyond your down payment
Closing costs on an investment-property purchase typically run approximately 2–5% of the purchase price, paid in addition to the down payment. On a $400,000 purchase, that is roughly $8,000–$20,000 depending on the state, the title fees, and how the loan is priced.
The common line items look like this:
- Lender origination fees or discount points
- Appraisal, usually with a market rent schedule for DSCR qualification
- Title insurance, escrow, and settlement fees
- Prepaid property taxes and insurance, including impound account deposits
- Recording fees and any state or county transfer taxes
- Entity documentation review if you close in an LLC
Worked example: full cash to close at 85% LTV
Here is the complete cash picture for a purchase at maximum leverage. This is an illustrative example, not a quote — your payment, costs, and terms will differ.
- Purchase price: $400,000
- Maximum LTV: 85%, so loan amount = $400,000 × 0.85 = $340,000
- Down payment: $400,000 − $340,000 = $60,000 (15%)
- Estimated closing costs: ~3% of price = $12,000
- Illustrative monthly PITIA: $2,600 (principal, interest, taxes, insurance)
- DSCR check: market rent $2,900 ÷ $2,600 PITIA = 1.12, above the 1.00 tier
- Reserves: 6 × $2,600 = $15,600 (documented in accounts, not spent)
- Cash paid at closing: $60,000 + $12,000 = $72,000
- Total liquidity to demonstrate: $72,000 + $15,600 = $87,600, about 22% of the purchase price
How to qualify for the lowest down payment
The lowest DSCR down payment goes to files that sit in the top tier of both grids: strong credit and a coverage ratio of 1.00 or better. A few practical moves improve both before you apply.
Raise the DSCR by targeting properties where market rent clearly covers the payment, considering an interest-only structure that lowers the qualifying payment, or negotiating price so the same rent covers a smaller loan. Raise the credit tier by paying down revolving balances and correcting report errors a couple of months before you shop.
Then get real numbers instead of guessing. You can request an indicative term sheet that shows your leverage, down payment, and structure options for a specific deal — Mortava quotes use a soft credit inquiry, so checking your terms won’t affect your score.
Where Mortava fits
Mortava is a direct lender for business-purpose investor loans in all 50 states. Our DSCR rental program for 1–4 unit properties offers up to 85% LTV on purchases — the 15% minimum down payment covered in this guide — with cash-out refinances to approximately 80% CLTV and loan amounts from $100K to $3.5M.
Underwriting follows the same tiers explained above: DSCR tiers of 1.00+, 0.75–0.99, and 0.50–0.74 (0.50 minimum), a 640 minimum FICO on the standard program, roughly six months of typical reserves, and the option to close in an LLC or corporation with 30-year, 40-year, and interest-only structures. Foreign national scenarios are reviewed individually.
Quotes use a soft credit inquiry, and indicative term sheets are generated through an AI review (Vesty) with manual approval after submission. Nothing here is a commitment to lend.
Build an indicative term sheet in minutes — soft credit inquiry only, subject to underwriting review.
Frequently asked questions
Editorial content. Mortava is a direct lender for business-purpose loans to real estate investors; where Mortava programs appear in a comparison, that inclusion is disclosed. Programs, rates, and guidelines change without notice, nothing here is a commitment to lend, and any terms shown are subject to underwriting review.