Question 1

Are McAllen rental yields really above the national average?

Accepted Answer

Yes, by an unusually wide margin for a market this size. ATTOM's 2025 Single-Family Rental Market Report named Hidalgo County, which is the McAllen metro, one of 28 "SFR Growth" counties nationally: places where average wages grew over the prior year and the potential 2025 annual gross 3-bedroom rental yield exceeds 10%, against a 7.45% national average across the 361 counties ATTOM analyzed. ATTOM did not publish Hidalgo's exact decimal, only that it clears 10%. A cross-check on index data points the same direction: metro single-family rent (Zillow ZORI single-family series) ran $1,811 a month in June 2026 against a $195,624 mid-tier home value, an 11.1% gross annualized rent-to-price ratio, well above a metro like Tampa at roughly 7.7% on the same math. That is gross of taxes, insurance, and management, which the next question shows are not small here. Run your own numbers with the DSCR calculator.

Question 2

How much does the McAllen property tax stack eat into DSCR?

Accepted Answer

More than most out-of-state investors expect, and it's the line that decides a thin deal. A McAllen-city rental inside McAllen ISD stacks Hidalgo County (0.5750), the county-wide Hidalgo County Drainage District #1 (0.1123), the City of McAllen (0.449989 for FY 2024-25), and McAllen ISD (0.9322 per $100) to roughly 2.07 before the South Texas College levy, so a true total north of 2.1%. Pharr, in PSJA ISD, stacks closer to 2.47 plus the college rate. On a $195,624 median-value rental at a 2.1% to 2.5% combined rate, that is $4,100 to $4,900 a year in property tax alone, or roughly 2.7 to 3.2 months of the metro's $1,811 median single-family rent. Texas gives investment property no homestead exemption and no 10% appraisal cap, so the assessed value can climb with the market year after year with nothing to hold it down. We size the loan on what the property actually nets after that stack, not the headline yield. Talk to your CPA about your own tax position.

Question 3

Can I underwrite a McAllen property on short-term rental income?

Accepted Answer

Only against a valid short-term rental permit for the city the property sits in. McAllen regulates rentals under 30 days through Code of Ordinances Chapter 46, Article VII: operators need a permit and an annual business license, must comply with the noise and nuisance articles, must collect hotel occupancy tax and file a monthly HOT report with the city, must keep smoke detectors in every advertised sleeping space, and must give guests a conduct brochure. A revoked permit bars the same property from reapplying for 12 months. We could not confirm the current text on an owner-occupancy requirement, so do not assume pure investor STRs are unrestricted in McAllen until you've read the current ordinance. STR rules for Edinburg, Mission, Pharr, Weslaco, San Juan, Harlingen, and Brownsville were not sourced for this page. Texas has no statewide STR preemption, so treat eligibility as a city-by-city question and confirm the current ordinance for the specific address before we underwrite nightly income.

Question 4

What kind of tenant and rent range should I underwrite in the Valley?

Accepted Answer

A working, growing population at rents well below the national median, which is the whole thesis of this market. Hidalgo County's median household income was $55,829 in 2024, roughly two-thirds of the US median, and that caps achievable rents even as the county keeps adding people: about 921,549 residents in 2025, up nearly 49,000 since 2020. City-level rents (Zillow ZORI, June 2026) run from $1,019 in Edinburg to $1,341 in Mission, with McAllen itself at $1,283 and Pharr at $1,207; most of Hidalgo County's city rents were flat to slightly down year over year, the one clear exception being Brownsville in Cameron County at +5.5%, tied to the SpaceX build-out. The spread between a $1,000 rent and a $1,300 rent decides a Valley DSCR deal more than the note rate does, so confirm actual comparable rents for the specific city and submarket before locking your numbers.

Question 5

Does a McAllen rental need flood or windstorm coverage?

Accepted Answer

Flood, plan for it; windstorm, it depends which side of the county line the property sits on. Hidalgo County is not in the Texas Windstorm Insurance Association's 14-county coastal catastrophe area, so a McAllen, Edinburg, or Mission property buys standard-market wind coverage. Cameron and Willacy counties, covering Harlingen and Brownsville, are inside TWIA's territory, and structures built or altered since 1988 there may need a TWIA policy plus a WPI-8 windstorm certificate. Flood is the shared peril across the whole Valley: storms on June 24-25, 2019 dropped 12 to 18 inches of rain, nearly 1,200 homes were destroyed or needed major repair, and the President issued a major disaster declaration for Cameron, Hidalgo, and Willacy counties. Check the FEMA flood zone on any parcel you're financing and price flood coverage as its own line item, not an assumption. We didn't find county-level average premium dollar figures for Hidalgo or Cameron, so get a bound quote on the subject property before you lock your DSCR assumptions.

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.

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