Question 1

Can I use short-term rental income on an Austin DSCR loan?

Accepted Answer

Only with a valid City of Austin short-term rental license, and since July 1, 2026 that license is a revenue precondition rather than paperwork. As of that date booking platforms must carry the license number on every Austin listing, must remove a listing within 10 days of a city delist notice, and may not collect booking fees on unlicensed rentals. The city requires one license per unit, licenses are non-transferable, and terms now run up to two years: $836.30 for a new license and $385.30 to renew, as of mid-2026. Violations carry fines of up to $500 with each day treated as a separate offense. If you plan to underwrite to nightly income, get the license question settled before we size the loan, because an unlicensed Austin unit can be pulled off the platforms.

Question 2

Why does my Austin rent estimate come in lower than the listing price?

Accepted Answer

Because advertised rent overstates effective rent across most of this market. As of June 2026, 73% of Austin metro apartment units were advertising a concession, and metro apartment occupancy was roughly 86% to 88%, about three to four points under the national average. Blended median rent in Austin was about $2,517 in June 2026, down 6.63% year over year. Those are apartment and blended figures, not a single-family read, but they tell you what a tenant in this metro can negotiate. Free weeks and move-in credits are real money out of year-one cash flow, so we underwrite what the property actually collects. Run your own numbers first with the DSCR calculator.

Question 3

How do Central Texas property taxes hit the DSCR calculation?

Accepted Answer

Hard, and often higher than the seller's current bill. Combined all-entity rates typically run about 1.78% to 2.10% in Travis County and about 2.00% to 2.35% in Williamson County, depending on the school district, city, MUD, and any PID at the specific address. Two Texas rules matter for an investor. Investment property gets neither the homestead exemption nor the 10% homestead cap on appraised value. And the separate 20% circuit breaker cap on non-homestead property requires you to have owned the property for a full January through December year, so it does nothing in year one. Travis CAD applies it automatically to qualifying property valued at $5.16 million or less. It is authorized only for tax years 2024, 2025, and 2026 and expires after 2026 unless the Legislature extends it, so do not build a 2027 hold on it. We escrow to the go-forward assessed bill, not the seller's capped one. Talk to your CPA about your own tax position.

Question 4

What should I budget for insurance on an Austin rental?

Accepted Answer

More than you paid three years ago, and it moves the ratio. The Texas Department of Insurance recorded statewide homeowners premium increases of 21.1% in 2023, 18.7% in 2024, and 4.3% in 2025, with the statewide average premium at $3,291 in 2024. Texas ranked fourth-highest in the country for home insurance premiums at the end of 2025. Texas also uses a file-and-use system, so insurers can put a rate increase in place before the state finishes reviewing it. Get a real bound quote on the subject property before you lock your assumptions. On a thin DSCR, a $600 swing in the annual premium is the difference between an approval and a decline.

Question 5

Is now a bad time to buy an Austin rental with rents falling?

Accepted Answer

It depends on whether your hold outlasts the supply wave. Greater Austin absorbed a large delivery of new apartments through 2025, which is what pushed occupancy and concessions where they are today. At the same time, metro building permits fell 29.5% year over year in March 2026, with multifamily down about 69% and single-family roughly flat. Less new supply entering the pipeline now generally means a tighter rental market on a two-to-three-year lag, which is the horizon a 30-year DSCR hold actually cares about. That forward read is our analysis, not a forecast we can source. Underwrite to today's collected rent, and treat any later rent recovery as upside rather than as the reason the deal works. See the DSCR program terms for leverage and structure.

Question 6

What is a DSCR loan, and how do I qualify without tax returns?

Accepted Answer

A DSCR (debt service coverage ratio) loan qualifies on the property's rental income instead of your personal income, so there are no W-2s or tax returns required. We compare the rent, from a signed lease or the appraiser's market-rent estimate, against the monthly payment. A DSCR of 1.00 means the rent covers the payment, and we lend with a DSCR as low as 0.75.

Question 7

What rate and terms can I get on a rental loan?

Accepted Answer

Our rental program starts around 5.50% interest-only, with 30-year fixed and 5/7/10-year ARM options, for a single property or a whole portfolio. The lowest pricing goes to strong credit, lower leverage, and a DSCR above 1.20; your quote depends on the file and is subject to underwriting.

Question 8

How much can I borrow, and what is the maximum LTV?

Accepted Answer

We finance up to 80% loan-to-value on a purchase, with rate-and-term and cash-out refinances available, on loan amounts from $100K to $3M. Cash-out leverage is typically a little lower than purchase. The property's cash flow and your credit set your final leverage.

Question 9

What credit score do I need for a DSCR loan?

Accepted Answer

We start at 640, and the best pricing goes to strong credit. Because the loan qualifies on the asset, your score affects your rate and leverage more than whether you are approved.

Question 10

Can I get a DSCR loan on a short-term rental (Airbnb)?

Accepted Answer

Yes, short-term rentals are considered. We can underwrite using market or projected rents, and the property still needs to meet our DSCR. Tell us how the property is operated so we can structure it correctly.

Question 11

Is there a prepayment penalty?

Accepted Answer

Long-term rental loans usually carry a prepayment penalty, commonly a step-down such as 5/4/3/2/1. We offer flexible prepay structures, including buying down to a shorter penalty for a slightly higher rate, and we will lay out the options on your term sheet.

Rental / DSCR in Austin

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